Australia's wool industry risked losing hundreds of millions of dollars unless it boosted efforts to keep out exotic diseases, a report issued today said.

The industry was unprepared to fight diseases such as foot-and-mouth, bluetongue, sheep pox and screw worm fly, the Australian Wool Innovation (AWI) said.

The company released a report which found the wool industry would not only suffer lost production from disease outbreaks, but important international markets would disappear while regional areas would suffer as farmers walked off the land.

While the chance of a major disease outbreak was low, not enough was being done by wool growers to minimise disease threats, it said.

"We found there are serious gaps in Australia's readiness to combat large-scale outbreaks of the exotic diseases of concern to the wool industry," the report found.

"The wool industry's limited involvement in exotic diseases in recent years has reduced its ability to address these issues."

Wool is one of Australia's top 10 exports, worth more than A$3bn (US$1.56bn) a year.