The minister responsible for regulating social media platforms has refused to criticise a colleague spreading disinformation online.
But Communications Minister Paul Fletcher wants companies including Facebook and Google to be more transparent and accountable about policing their content.
Mr Fletcher argues the tech giants have shown a great reluctance to take responsibility for what is being posted and is preparing to introduce a voluntary code of conduct in relation to online disinformation.
"Of course if their performance is not satisfactory we certainly reserve the right to take more direct regulatory action as we have with online safety," Mr Fletcher told ABC radio on Thursday.
He rejected several invitations to rebuke Liberal backbencher Craig Kelly for peddling conspiracy theories about a violent siege of the US Capitol and promoting discredited coronavirus cures.
"I'm not going to get into commenting on individual cases of what people say online," Mr Fletcher said.
"Australia's medical advice comes from the chief medical officer for the department of health, the minister for health and the government's advice is very clear on what people should do."
There are significant concerns Mr Kelly and others are actively undermining the government's messages about the coronavirus response.
Former prime minister Malcolm Turnbull has accused Mr Kelly of being reckless and irresponsible for misleading the public.
Asked whether the government had a duty to call out dangerous disinformation, Mr Fletcher acknowledged it was responsible for managing and responding to the pandemic.
But he joined other senior ministers in refusing to repudiate Mr Kelly.
"As communications minister, I will confine my comments to the issue of how we regulate the internet," Mr Fletcher said.
Several members of the federal government have publicly criticised Twitter and Facebook for banning Donald Trump after he incited the US Capitol riots, raising concerns about freedom of speech.
Mr Fletcher highlighted there has never been an absolute right to free speech in Australia, whether online or offline.
He declined to comment on the tech titans' treatment of Mr Trump, who has become the first president in US history to be twice impeached, charged with inciting an insurrection.
The minister is also in a battle with Google and Facebook over plans to force the companies to pay news publishers for displaying their content.
Google says the bargaining code, which is being examined by a Senate committee before a vote in parliament early this year, will damage its business.
As the battle heats up, Google has been experimenting with burying local news content in its search engine functions.
Mr Fletcher said Google's conduct went to the heart of market power issues at play.
"This underlines the very point we have been making," he said.
"There are significant competition issues in relation to the conduct of the social media digital platforms."
The head of the Australian Competition and Consumer Commission is also preparing to release a report on Google's market power over the local online advertisement market.
Australian Associated Press