A set-up by a foreign intelligence agency and a cover-up by senior federal government officials led to the conviction and jailing of six Australians in Sydney for terrorism, a Herald investigation reveals.

The six men, known as the Croatian Six, were each sentenced to 15 years' jail in 1981 for conspiracy to plant gelignite bombs at targets around Sydney, including the former Elizabethan Theatre at Newtown and a major water supply pipeline at St Marys. All served jail terms in the range of 10 years.

Their trial was one of the longest in our legal history, and controversial then and since, with a former NSW Coalition government deciding against a judicial review in 1994. But new material found as part of an investigation by The Sydney Morning Herald has reinforced doubts.

Three of the six - Mile Nekic, Max Bebic and Vic Brajkovic - have lodged a new application with the Chief Justice of NSW, Tom Bathurst, QC, for a judicial review of their convictions.

A prominent Sydney human rights lawyer, Sebastian De Brennan, is representing them.

The case is now cited by a leading American counter-terrorism expert, Professor John Schindler, of the US Naval War College, as a ''classic'' agent provocateur operation run by the intelligence agency of the then communist regime in Belgrade, known as the UDBa, against exile communities seeking to dismantle the Yugoslavian federation.

Former UDBa officials involved with running the operation, or who knew directly about it, had told him it was ''one of their great successes'', Professor Schindler said. ''They succeeded in discrediting the Croatian diaspora in Australia completely.''

Professor Schindler says high-level officials in the security service ASIO and federal police would have been aware of this. A former senior lawyer in the Department of Prime Minister and Cabinet, Ian Cunliffe, corroborates this, saying he saw intelligence material that would have led to ''not guilty'' verdicts.

The material was deliberately withheld from then prime minister Malcolm Fraser and subpoenas by defence lawyers in the trial were blocked on claimed national security grounds.

Mr Cunliffe said it was ''tantamount to a conspiracy to pervert the course of justice''. He was bound by official secrets laws but would welcome the chance to testify before a proper inquiry.

''There have been miscarriages in relation to terrorism around the world, and the Birmingham Six and the Guildford Four are two examples of that where people had been convicted and subsequently it was found there had been dodgy practices by police and others to get those convictions and they were subsequently overturned,'' he said. ''This case is, I believe, as great an injustice as those cases.''

Terror Six Claim It Was Fix