The Howard Government has today admitted that securing oil supplies is a factor in Australia's continued military involvement in Iraq.

Defence Minister Brendan Nelson said today oil was a factor in Australia's contribution to the unpopular war, as "energy security" and stability in the Middle East would be crucial to the nation's future.

Speaking ahead of today's key foreign policy speech by Prime Minister John Howard, Dr Nelson said defence was about protecting the economy as well as physical security.

Dr Nelson also said it was important to support the "prestige" of the US and UK.

"The defence update we're releasing today sets out many priorities for Australia's defence and security, and resource security is one of them," he told ABC radio.

"The entire (Middle East) region is an important supplier of energy, oil in particular, to the rest of the world.

"Australians and all of us need to think well what would happen if there were a premature withdrawal from Iraq?"

Federal Opposition leader Kevin Rudd has attacked Dr Nelson's comments, saying they contradict what the Howard Government said when the war began.

"When Mr Howard was asked back in 2003 whether this war had anything to do with oil, Mr Howard said in no way did it have anything to do with oil," Mr Rudd told reporters in Sydney today.

"This Government simply makes it up as it goes along on Iraq."

Dr Nelson said the primary reason for Australian troops remaining in Iraq was to prevent violence between the Sunni and Shia population, and to bring stability to the region.

"We're also there to support our key ally - that's the United States of America - and we're there to ensure that we don't have terrorism driven from Iraq which would destabilise our own region," he said.

"For all of those reasons, one of which is energy security, it's extremely important that Australia take the view that it's in our interests... to make sure we leave the Middle East and leave Iraq in particular in a position of sustainable security."

Isolationism would not make Australia safer, he said.

When Australia joined the US-led invasion force of Iraq in 2003, the Government said it was primarily because Iraq had weapons of mass destruction that could pose a threat to the US and its allies.

Mr Rudd, who spoke to journalists after delivering a speech to the Lowy Institute on tackling the root causes of terrorism, said it had been a mistake to send troops into Iraq.

"Mr Howard should follow Labor's lead and have a clear cut exit strategy from Iraq," he said.

"Australia's involvement in the Iraq war continues to make Australia a greater terrorism target than we'd otherwise be."