It's asked digital platforms including Facebook, Google and TikTok to drum up an industry code to address misinformation.

The Australian Communications and Media Authority says the code should help Australians better judge the bona fides of what they are reading online.

In an objectives paper released on Friday, the authority said it also wanted the code to improve transparency around how the social media giants operated.

"False and misleading news and information online has the potential to cause serious harm," chair Nerida O'Loughlin said.

The watchdog is setting a December deadline for the tech giants to formulate the code.

It will report to government by June next year on how effective the voluntary code has been, and may report sooner if the industry fails to set one up.

But the ACMA may also ask the government to regulate social media if it finds the industry's code doesn't properly protect users from fake news.

Friday's report said the summer bushfires and the coronavirus pandemic had been fertile ground for the spreading of harmful misinformation.

This included conspiracy theories about the cause of the fires and people peddling fake cures for coronavirus.

The ACMA said fake news on the pandemic had seen people get sick or property damaged.

Communications Minister Paul Fletcher said misinformation online was even more harmful to vulnerable Australians.

"The government expects the digital platforms will work constructively with the ACMA to set up long-term, transparent and accountable practices," Mr Fletcher said.

He said freedom of speech would still be protected and social media giants wouldn't become the arbiters of truth.

Australian Associated Press