Defence chiefs slam 'ridiculous' US label

Australia's defence chiefs have dismissed as "ridiculous" the listing of Middle East-based United States military forces as terrorists by Iran.

Iran has designated the United States Central Command a terrorist organisation, in retaliation to Donald Trump applying the same label to the Iranian Revolutionary Guard.

Defence secretary Greg Moriarty said the US Central Command was a vital arm of the American military, and therefore a very close ally of Australia.

Mr Moriarty didn't mince his words when asked to express his view on the high profile international stoush.

"The United States Central Command conducts itself in accordance with US law and with international law," he told a Senate inquiry in Canberra on Wednesday.

"The Australian Department of Defence does not recognise at all - and in fact, views as ridiculous - any designation or accusation that the United States Central Command is a terrorist organisation."

Defence chief Angus Campbell was even more blunt when asked for his own opinion.

"Doubly ridiculous," General Campbell told senators.