The Australian government wants to shift vast amounts of its records onto networks hosted by ‘‘cloud computing’’ providers, a cheaper, more flexible way to store the data.

But privacy, military and IT authorities are advising against granting some contracts to American firms, saying US laws may expose the data to unauthorised access.

In response, the US has accused the Australian government of misleading its agencies about the Patriot Act’s scope, and warned that its companies should not be barred from competing for the work.

At stake is a growing market worth hundreds of millions of dollars a year. Most large providers of cloud services are based in America.

Australia’s cyber-spy agency, the Defence Signals Directorate, and the Australian Government Information Management Office have warned agencies the Patriot Act allows the US government to access data held by American companies ‘‘without necessarily advising’’ the information’s owners. The legislation’s power extends to data stored outside America.

The US Trade Representative accused Australian officials earlier this year of ‘‘sending negative messages’’ about the risks of storing information overseas.

‘‘In the case of the United States, many such concerns appear based on misinterpretation of applicable US law, including the US Patriot Act and regulatory requirements,’’ it said.

American envoys are now pressing the Australian government to alter its official guidelines on data security.

A US embassy spokeswoman told The Canberra Times that American security and spy investigations were subject to ‘‘a careful set of constraints to protect individual privacy’’.

‘‘Concerns that laws such as the Patriot Act offer the US government carte blanche to obtain private data from US providers are misplaced.’’

If the US government wanted to access foreign-owned data stored by an American firm, it would ‘‘generally only make direct contact with the service provider with prior permission of the foreign government’’, the spokeswoman said.

The embassy also said the US believed ‘‘governments should not prevent service suppliers of other countries, or customers of those suppliers, from electronically transferring information internally or across borders ... or accessing their own information stored in other countries’’.

However, Australian Government Information Management Office senior executive Scott Wallace said yesterday the federal bureaucracy needed to comply with Australian security and privacy laws.

‘‘These place an obligation on agencies to consider the risks of their approaches.’’

He said cloud storage offered many benefits, but the market was immature and lacked ‘‘appropriate standards’’ and protection.

‘‘Our guidance says we don’t think the public cloud is an appropriate sourcing model when you’re dealing with personal or sensitive information, [at least] for the next several years.’’

Mr Wallace said Canada and members of the European Union were also wary of giving US companies access to confidential government records.

‘‘But, clearly, if information is publicly available and not sensitive, those risks will be lower.’’

Greens communications spokesman Scott Ludlum said last night the bureaucracy’s caution was well-founded. But he urged the Australian government to go a step further and adopt a formal policy of hosting its data domestically.

‘‘In the absence of safeguards in the US, I think we need to do this, particularly for national security and other sensitive information,’’ Mr Ludlum said.