Cyber Security Minister Clare O'Neil says a ransomware attack on Medibank and the alleged removal of customer data has been referred to the Australian Federal Police for investigation.
The health insurer on Wednesday confirmed it received a message from a group that claimed it had removed customer data and wanted to negotiate with the company.
Medibank was hit by a cyber attack last week but at the time said there was no evidence sensitive data had been accessed.
Ms O'Neil confirmed the company was working with the Australian Cyber Security Agency and the Australian Signals Directorate over the alleged ransom request.
She also said the matter had been referred to the Australian Federal Police which had begun an investigation.
But she said all parties involved were still trying to work out if any data had been taken.
"The facts are still being established and I appreciate it might be hard to understand this from outside of a large organisation, but when you've got a complex technological system it takes a bit of time to understand what has changed in that system in the event of an attack," she said.
"But the reason I am so concerned about this at the moment is because of course the sensitive nature of the information involved.
"If you think about a lot of cybercrime it relates to financial or identity information, which is very problematic when it comes into the public realm,
"What we have here is … healthcare information and that just on its own being made public can cause immense harm to Australians and that's why we are so engaged with this."
Ms O'Neil would not say what advice the Australian Cyber Security Centre was giving the company about whether or not to engage in the request to negotiate on a ransom.
'This is the new world'
Medibank CEO David Koczkar on Wednesday apologised to customers and said he understood the news would be distressing.
"We have always said that we will prioritise responding to this matter as transparently as possible," Mr Koczkar said.
"Our team has been working around the clock since we first discovered the unusual activity on our systems, and we will not stop doing that now.
"We will continue to take decisive action to protect Medibank customers, our people and other stakeholders."
Ms O'Neil said while the "very best people" were working on the matter, it was another reminder that cybercrime was fast becoming one of the biggest crime threats globally.
"This is the new world that we live in," she said.
"We are going to be under relentless cyber attack essentially from here on in and what it means is that we need to do a lot better as a country to make sure that we are doing everything we can within organisations to protect customer data.
"I think combined with Optus, this is a huge wake up call for the country and certainly gives the government a really clear mandate to do some things that frankly probably should have been done five years ago, but I think are still very crucially important."
