The Australian government is all set to examine the 'secret' evidence that led to the cancelling of visa of Indian doctor Mohamed Haneef, who was wrongly accused of involvement in the failed UK terror plot.

Attorney-General Robert McClelland outlined the terms of reference for the Haneef inquiry, to be chaired by former Supreme Court judge John Clarke QC which was announced on Thursday.

McClelland said it would examine the arrest, detention, charging, prosecution and release of Haneef.

Clarke will also examine the decision by Andrews to cancel Haneef's visa hours after he was granted bail by a Brisbane magistrate, a move that saw Haneef placed in immigration detention.

Kevin Andrews on Thursday justified his decision based on secret evidence supplied to his department by the Australian Federal Police. McClelland said that information would be submitted to Clarke.

"The Department of Immigration has indicated that it will fully co-operate with the inquiry, which we would expect to include making all necessary available files available to Clarke," he said.

Haneef will also be invited to give evidence and if needed Clarke said he may travel to India to take Haneef's statement should he be unwilling to return to Australia.

Mick Keelty, who faced intense criticism following the AFP's mishandling of several terrorism cases, on Thursday welcomed the inquiry.

"I stand by the role of the AFP and state police as part of the joint counter-terrorism teams, as well as our international police partners during this investigation," he said.

Andrews also extended his cooperation and said, "I make no apology for having acted in the national interest and having acted in a way that put the safety and security of Australians first. I acted on the brief of evidence and I acted on the interpretation of the law as it was understood at the time," he said.

A spokesman of AFP confirmed the investigation into Haneef remained active, but would not say how many personnel had been working on the case.

At its height, about 600 law enforcement officials were working on the investigation, which cost taxpayers $7.5 million.

The purpose of the inquiry would be to improve the performance of law enforcement agencies in their handling of terror cases, McClelland said.

Clarke will not be able to compel witnesses but he may request additional powers if witnesses do not co-operate, he said.

The Australian newspaper on Friday said it can reveal that AFP Commissioner Keelty had blocked the release under Freedom of Information laws of a report into problems faced by the AFP, which was commissioned shortly before the Haneef case.

The report, by former New Zealand [Images] police commissioner Rob Robinson, reviewed the governance and executive structure at the AFP and contributed to a top-level reorganisation that separated responsibility, under Keelty, for national security and operations.

Haneef, working at the Gold Coast Hospital, was arrested on July 2, 2007 from Brisbane airport as he was to board a flight to India. He was kept in custody for 12 days before being charged with providing support to a terrorist group.