Prime Minister John Howard said on Monday that Uday Adnan al-Takriti arrived illegally by boat in 1999 but was denied a visa by the immigration department in September 2000, after admitting to belonging to Saddam's special security services.
"The department did not want to give him a visa," Howard told parliament after the Sydney Morning Herald broke the news that al-Takriti had been living in Australia for six years.
Howard said al-Takriti, 38, had had the visa denial overturned by an appeals tribunal which found he had not held a position in Iraq which was directly or indirectly involved in crimes against humanity. Al-Takriti gained a temporary protection visa in 2005.
The Herald said al-Takriti was a member of Saddam's family, a major in his personal security force and also worked for Saddam's son Qusay tracking down dissidents.
It said he was now married to an Australian doctor and living in the southern city of Adelaide.
Howard said he would ask his immigration minister whether the government could take further action against al-Takriti.
The Herald said at least 30 men seeking asylum in Australia had been refused visas over the past 10 years on grounds they had committed crimes against humanity, but many had remained in Australia for years due to a slow appeals process.
Australia has never suffered a
major peacetime attack
News that al-Takriti was living in Australia prompted the Labour opposition to claim that the country's immigration system had failed.
It came on the day the upper house Senate began debating on new laws aimed at combating "home-grown" terrorism.
Initially set to be pushed through on Monday, the legislation is expected to be passed by the end of the week when the parliament rises for a summer recess.
Labour immigration spokesman Tony Burke said that Australia's immigration character test was meant to protect the country from people who were considered dangerous.
He said: "If the reports today have any validity, then you have got to say somebody who had the job for Saddam Hussein of chasing dissidents falls on the dangerous side of the equation."
Burke added: "He [Uday Adnan] should not have passed a character test. If this is the outcome, the system has got to have collapsed," .
Australia, a staunch US ally with troops in Iraq and Afghanistan, has never suffered a major peacetime attack on home soil. The country has been on medium security alert since shortly after the 11 September 2001 attacks on the US.
A planned law will allow detention
without charge for seven days
One state political leader has described the new anti-terror laws expected to pass through parliament this week as "draconian" but necessary, but they have been widely criticised by civil rights and law groups.
The Law Council of Australia launched a national advertising campaign on Monday opposing the laws.
"The government is using the threat of terrorism to introduce laws that put our most basic civil liberties under threat. The ramifications have the potential to be as terrifying as terrorism itself," said the council's full-page newspaper advertisement.
The new laws will allow police to detain suspects for seven days without charge, use electronic tracking devices to keep tabs on them, and make support for fighters in countries such as Iraq an offence punishable by a seven-year jail sentence.
The laws were proposed after the 7 July London bombings by a group of young British Asian Muslims.