Defence has begun stripping Israeli-developed technology from Army equipment because of fears it could be used to harvest sensitive data from military hardware and systems.
The company in question, Elbit Systems of Australia, has "strongly" rejected what it claims are "security rumours" connected to its multi-billion-dollar Battle Management System (BMS).
However, the ABC can reveal Army Headquarters last month issued a directive ordering Defence to "cease use" of the Elbit BMS Command and Control (BMS-C2) in preparation for a replacement system.
"The employment of the BMS-C2 system version 7.1 within Army's preparedness environment is to cease no later than May 15 2021," the order states.
Military sources have told the ABC that Defence believes the Elbit technology may compromise sensitive data, triggering a directive that it "not be configured or accessed" on certain Army systems.
Elbit's BMS, introduced a decade ago, allowed Army commanders to replace maps and analogue radios with advanced digital, encrypted technology and networks to better coordinate their units in the field and to protect classified information.
Army's directive last month also demanded items such as USB memory sticks and software "be withdrawn from issue to users and consolidated and quarantined by signals support staff".
"Defence is to cease use of the BMS-C2 in accordance with timings in order to prepare for the transition to an interim Battle Management System capability."
In a statement, Elbit Systems of Australia managing director, retired Major General Paul McLachlan, strongly rejected suggestions the company's product posed any risk.
"Elbit Systems of Australia strongly refutes the security rumours raised in recent media articles," Major General McLachlan said.
"Elbit Systems of Australia utilises secure software development processes in collaboration with the Department of Defence, including the provision of all source code."
Major General McLachlan added: "Elbit Systems of Australia will continue to work closely with the Australian Defence Force to deliver its network capability requirements."
The Defence Department and federal government are yet to comment on the decision to stop using Elbit equipment, which has begun to receive significant media attention in Israel.