A key crossbench senator wants at least 100 Chinese diplomats and consular staff kicked out of Australia.
Centre Alliance senator Rex Patrick argues the number of Chinese representatives must be radically reduced on national security grounds.
"The Australian government should bite the bullet and take long overdue action," he said on Wednesday.
The aggressive move would undoubtedly spark immediate retaliation from Beijing, but Senator Patrick believes it would be worthwhile.
He argues Australian ministers and diplomats are already routinely ignored by their Chinese counterparts.
China has close to 150 diplomatic staff in Australia and Senator Patrick wants two-thirds of them expelled.
He argues the Chinese diplomatic presence is "somewhat bloated" given the country has significantly more staff in Australia than the United States, United Kingdom, Canada and New Zealand.
Senator Patrick also claims there is "no question" Chinese embassy and consular staff are engaging in espionage and political interference.
"It's an open secret that Chinese intelligence activities in Australia have expanded massively over the past two decades," he said.
"While there has been much public focus on cyber espionage, China's clandestine efforts continue to rely heavily on traditional human intelligence operations, much of it under the cover of diplomatic and consular activity."
Relations with China are already under heavy strain after Australia led international calls for a coronavirus inquiry.
Beijing has told students and tourists to stay away from Australia, and penalised beef and barley exports.
Australia's response to new national security laws in Hong Kong has also enraged Beijing.
Senator Patrick said Australia must reset its relationship with China and adopt a much firmer footing.
Australian Associated Press