An internal investigation by the Department of Foreign Affairs revealed on Wednesday that Dennis Richardson, then head of the department, and then first assistant secretary Greg Moriarty, were briefed by ASIO of Mr Zygier's arrest on February 24, 2010, but failed to directly inform their then minister, Stephen Smith, or Prime Minister Kevin Rudd.

''I don't think that's satisfactory. I don't think it's remotely satisfactory,'' Senator Carr said of Mr Zygier's welfare being left to ASIO.

The reliance on ASIO to handle the case came despite the agency's deeply strained relations with Israeli counterpart Mossad - for whom Mr Zygier was working - at the time.

Fairfax Media understands that ASIO and Mossad had a deal not to use each other's nationals as spies but that the Israelis broke the agreement by recruiting Mr Zygier and at least two other dual citizens. Relations had also plummeted because of Israel's use of forged Australian passports in the assassination in Dubai of Hamas commander Mahmoud al Mabhouh.

Mr Zygier reportedly killed

himself in December 2010 in Israel's high-security Ayalon prison, where he was being held in extraordinary secrecy on charges he broke Israeli national security laws.

Foreign Minister Bob Carr, who ordered the investigation after news of the Prisoner X case broke, admitted that DFAT had been wrong to rely on ASIO, which was in turn accepting the assurances of the Israeli government that Mr Zygier was being well-treated.

While Mr Zygier had 50 visits from his family in prison, and had regular access to his lawyer, DFAT ''did not follow up on the assurances received about Mr Zygier'', other than a brief inquiry by Mr Moriarty, the report states.

Mr Moriarty told the inquiry that Mr Zygier's dual nationality was ''one, but not the sole, factor in the decision not to make diplomatic inquiries on his behalf''.

Australia's embassy regulations make clear that the government offers dual nationals such as Mr Zygier the same level of protection as anyone else, stating that ''consular officials are charged with protecting Australians even if they hold another nationality''.

Mr Richardson, a former ASIO director-general who is now head of the Defence Department, declined to comment on Wednesday. Mr Moriarty, who is now ambassador to Indonesia, could not be reached for comment.

The investigation report also raises questions about who in the office of the then prime minister, Mr Rudd, as well Mr Smith's office, knew of the Zygier case. Both said on Wednesday they had ''no recollection'' of being briefed, though the investigation states ASIO informed Mr Rudd's office and that Mr Smith's chief of staff, Frances Adamson, who is now ambassador to China, was briefed by Mr Moriarty.

Senator Carr said he accepted the report's recommendations that there be a clearer set of protocols as to which branch of government would be responsible for helping Australians in such cases in future.