Smith warns of defence scandal liability

Defence Minister Stephen Smith has admitted there is a "distinct possibility" taxpayers could be liable if a class action against defence succeeds.

In the wake of the Skype scandal, many former defence employees have come forward with allegations of rape, sexual assault and bastardisation inside defence.

Some of the claims date back to the 1960s and the era of the Vietnam war.

The rush of anecdotes has led to independent senator Nick Xenophon suggesting he will help form a class action law suit against defence.

"I have met with them and am happy to work with them on this issue," Senator Xenophon told News Ltd.

"I will help facilitate getting lawyers involved in a potential class action lawsuit."

Mr Smith, a former lawyer, was open on what a class action could deliver.

"There is a distinct possibility, either in individual cases or more generally that through the department of defence or through the services, there is a Commonwealth liability here," Mr Smith told Network Ten on Sunday.

He called for calm on an issue that has ballooned from the initial scandal of a female cadet at the Australian Defence Force Academy being secretly filmed while having sex.

"We do need to take it (the investigation) sensibly, carefully, step-by-step," Mr Smith said.

The Vietnam Veterans Association of Australia is warning the costs of such action could "be phenomenal".

"There is only a limited bucket of funds," association president Ron Coxon told AAP on Sunday.

Mr Coxon raised the possibility that in some cases the perpetrator may be dead.

Australia Defence Association chief Neil James, a regular spokesman on defence matters, said the issue was becoming increasingly complex.

"It's a really difficult area," Mr James told AAP.

"Not all of the complaints may be valid, while some of them may be a little exaggerated."

Comment was sought from opposition defence spokesman David Johnston.