Fake banknotes used at Sydney school fete

An inner-west Sydney community is livid after counterfeit banknotes were used at the local primary school's fundraising fete.

Police have confirmed about $400 worth of counterfeit 50 dollar banknotes were circulated at the Kegworth Public School's annual "Autumn F.A.R.E" in Leichhardt on Sunday.

Outraged locals have aired their frustrations on social media.

"Disgraceful especially given all the huge effort the parents and committee put into this event. Very sad indeed," Emma Dixon said on Facebook.

Rebecca Nicolson Dawson wrote: "How can we donate some money to help them recoup? I am happy to swap some fake $ for real cash for the school. I know how much hard work goes into a school fete. How infuriating!".

The number of counterfeit 50-dollar banknotes in Australia has increased fourfold over the past three years, according to Reserve Bank of Australia data.

In 2014/15 there were more than $1.6 million worth of counterfeit 50-dollar banknotes in Australia, compared with just over $345,000 worth in 2011/12.

It's the most common counterfeit note circulated in Australia, says the RBA, with more than 10 times the number of fake $100 notes - the second most abundant denomination - in 2014/15.

From September 1 the RBA will rollout a new generation of banknotes with improved security features.