Australia's New South Wales (NSW) Premier Barry O'Farrell said here on Wednesday that the Federal Government's decision to ban China's Huawei from tendering for the National Broadband Network (NBN) contracts was illogical and " a huge insult" to the Chinese telecoms giant.

"Huawei is an international company, Huawei has a presence in this country, Huawei is trusted to deliver telecommunication services in this country," O'Farrell told reporters.

"I think it is a huge insult to a company that comes from a country where every state and national government should be seeking to further trade and investment ties," he said.

O'Farrell also said he was worried about the decision that may hurt the Australia-China trade and economic relationships.

"I'm concerned that this illogical federal government decision may cruel relationships with the largest economy in our region - a Chinese economy that is doing much to underpin the Australian economy at the present time."

It was reported that the Australian Federal Government last year told Huawei not to bother tendering for any NBN contracts because of security concerns over cyber attacks originating from China.