China's biggest maker of equipment for the phone industry, Huawei, has been barred from bidding for a huge project in Australia.
It was told late last year that it should not try to bid for work on Australia's National Broadband Network.
The $37.5bn (£24bn) project aims to connect almost every Australian home to a very high speed internet connection.
An Australian Financial Review (AFR) report says that Huawei has been barred over security concerns.
Without making direct reference to the Chinese firm, Australian Prime Minister Julia Gillard said: "The National Broadband Network is a huge infrastructure project and you would expect that as a government we would make all of the prudent decisions to make sure that that infrastructure project does what we want it to do and we've taken one of those decisions."
Jeremy Mitchell, director of corporate affairs at Huawei Australia said: "While we're obviously disappointed by the decision, Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology."
Huawei hopes to become the world's biggest seller of equipment to the telecoms industry by the end of the year and has already broken into markets in Asia, Africa and Europe.
But last year a US Congressional Committee said the firm could post a security risk.
One of the reasons cited was that the company's founder Ren Zhengfei was in the Chinese Army until 1984.