The office of Foreign Affairs Minister Alexander Downer says there has been a misunderstanding with the Saudi Arabian embassy over comments regarding the funding of an Adelaide mosque.
The Saudi embassy on Tuesday released a statement saying it was shocked by comments made by Mr Downer relating to an investigation into the funding of the mosque by Saudi extremist groups.
The statement criticised Mr Downer for not telling the embassy about the investigation, Fairfax newspapers report.
Mr Downer said on Monday there had been an investigation by federal authorities into funding for mosques from Saudi Arabia.
He said that the case had involved and extremist "with an extremist agenda, as it happens in Saudi Arabia.
In a later interview Mr Downer said there was concern about "some elements" in Saudi Arabia, which were trying to spread their extremist interpretation of Islam.
A spokesman for Mr Downer told Fairfax that transcripts of both interviews had been sent to the Saudi embassy, and that after it had seen them the embassy agreed there had been a misunderstanding.
"Clearly there was no criticism of the Saudi Arabian government," a second spokesman told Fairfax.