"Sock puppet" accounts will not have the ability to spread AI-generated propaganda or manipulate public debate under new social media laws, Labor has said.
Researchers and the government's eSafety Commissioner have previously had to jump through hoops to create undercover profiles if they wanted to catch out companies behaving badly.
But creating false online identities for sleuthing purposes will be made lawful under Labor's proposed Digital Duty of Care legislation, Communications Minister Anika Wells announced on Thursday.
They also let researchers and regulators generate material using artificial intelligence, as long as that activity is not prohibited by existing laws, although its list of permitted uses is unlimited.
That detail raised alarm bells about the government using sock puppet accounts to spread AI-supercharged lies online and distort public debate, which Ms Wells rejected.
"That power, it's just not there," the minister said during an address to Canberra's National Press Club.
She argued the provisions were designed to protect legitimate testers going about their business from the wrath of big tech.
"Under the current Australian Online Safety Act, there are no protections for researchers to do this work without facing legal threats," Ms Wells said.
"This is an unacceptable blocker, stifling Australian research and our ability to hold platforms to account."
The minister cited the example of two Australian researchers having to base one of their studies in Europe to protect themselves from legal action by big tech.
Their examination of Facebook, Instagram, TikTok, X, YouTube and Pinterest found the platforms were at best "not good enough" at dealing with dangerous and disturbing content, the minister said.
"Does Roblox allow an adult profile to talk to kids? Can a 14-year-old girl create a profile on Instagram without being asked once to prove they are over the age of 16?
"These provisions simply make that (undercover research) lawful and the evidence they collect usable."
The laws will let sock puppets observe, download or make records of online material, engage with online service providers and test their features.
But the proposal also sparked concern when initially floated because the term "sock puppets" usually refers to an account used proactively and deceptively, including to harass users.
Critics also raised the possibility of all anonymous accounts not connected to legitimate research or regulation being banned, which is not the case.