The edict leaves several dozen Australian couples who have gone to Cambodia seeking to become the biological parents to babies born to surrogate mothers open to possible imprisonment and fines for human trafficking.

The couples have ignored warnings they could become entangled in Cambodia's murky and corrupt legal system.

The south-east Asian country ruled by strongman Hun Sen has emerged as the latest hub of Asian surrogacy after commercial surrogacy was banned in Thailand, Nepal and India.

Many of the vitro fertilisation (IVF) doctors, lawyers and agencies chased out of Thailand after the Thai military shutdown the industry there following the Baby Gammy scandal in 2014 have relocated to Phnom Penh, where their businesses are again booming.

Australia's ambassador in Phnom Penh, Angela Corcoran, discussed surrogacy with Cambodia's justice minister and officials in Phnom Penh last Friday.

"Cambodia's Ministry of Foreign Affairs and International Cooperation has formally advised the Australian Government that the act of commercial surrogacy, or commissioning commercial surrogacy, is prohibited in Cambodia," a spokesperson for Australia's Department of Foreign Affairs said when asked about the meeting.

The spokesperson denied Cambodian media reports that Ms Corcoran proposed assisting Cambodia to develop a law on surrogacy.

Until now Cambodian authorities have largely ignored surrogacy agencies in the capital which decline to speak openly about their practices to the media, apparently fearing a government crackdown or public backlash in the deeply Buddhist country.

But several surrogacy agencies operating in the capital have boasted of successful births on their websites. Several babies are believed to have been delivered to Australian couples.

One agency, New Genetics Global, says on its website that based on its review surrogacy is not a matter for the country's criminal code because it relates to adoptive parents, contradicting the government's position.

Another called My Fertility Angel says it has a large pool of Cambodian and Thai surrogate mothers "who are ready to help childless parents in order to make their dream of parenthood come true".

US-headquartered Surrogacy Cambodia offers a $US10,000 cash rebate upon signing up for a surrogacy program.

Sam Everingham, the founder and director of Families Through Surrogacy, an Australian-based surrogacy group, told Fairfax Media that laws need to be passed in countries like Cambodia that protect the rights of the unborn child, the surrogate and most importantly, provide legal certainty for parents.

"Having said that the practical ability to police such laws in developing countries is doubtful," he said. "In Nepal we saw Australian authorities increasingly stepping in to conduct their own investigations where surrogate identification documents, for example, were inadequate."

Many of the surrogates in Cambodia are not Cambodian residents but Thai women bypassing laws that criminalise commercial surrogacy in Thailand, raising the possibility of legal problems blocking parents taking their babies home from Phnom Penh.

Some Cambodian women have been recruited but IVF and surrogacy are not socially condoned or widely understood in Cambodia.

Mr Everingham said that in countries where surrogacy has been banned, Australia's diplomatic missions have had to devote huge amounts of manpower to assist with the processing and citizenship of newborns.

After the Thai government banned surrogacy, more than 200 Australian couples found themselves in limbo with their babies, unable to take them home until Australia made representations to Thai authorities.

An Australian parliamentary committee found in April an average 250 couples who had exhausted all other options to have a child travel overseas each year to enter into arrangements with surrogate mothers, despite the fact that doing so is an offence in Queensland, New South Wales and the Australian Capital Territory.

The committee noted that legal, economic and social conditions in countries with weak regulatory systems greatly increase the risk that the right to the child, and of the birth mother, may be infringed, in particular raising concerns about unethical agencies effectively trafficking in children.

The committee found the birth mother may also be vulnerable to exploitation, health risks and pressure to undergo risky procedures to which she may not otherwise consent, including multiple embryo transfers, caesarean deliveries and abortions.

Mr Everingham said it was disappointing the committee played it safe, simply recommending a further inquiry and setting up of a task force.

"Reforming our domestic laws is an absolute priority, given some Australians are simply forced to go off shore, given the complete lack of access at home," he said. "However domestic reform won't stop demand for offshore arrangements completely."

Australia's smartraveller.gov.au advises Australians not to visit Cambodia for the purpose of engaging in commercial surrogacy.

"We strongly caution Australians to consider all legal and other risks involved in pursuing international surrogacy," the advice says. "You should be aware that the regulatory environment in a host country may change without warning," it said.

"The absence of rules and regulations governing surrogacy in some countries should not be seen as condoning commercial surrogacy ... the risks of entering into such arrangements in less regulated markets are high."