More than 700,000 Rohingya people have poured across the border to Bangladesh to escape Myanmar's troubled Rakhine since last August following a military crackdown.

The United Nations has described the situation as a "textbook case of ethnic cleansing".

While the United Kingdom, United States, European Union, France and Canada have cut ties with the Myanmar military, Australia's program continues.

Military assistance is worth almost $400,000 and involves training in humanitarian assistance, disaster relief, peacekeeping and English classes.

Mr Marles described the Rohingya situation as appalling and the most pressing refugee crisis in Australia's region.

"I think that makes it very difficult until that circumstance is resolved to continue or to have any defence cooperation with the Myanmar military," Mr Marles told the National Press Club in Canberra, adding that making that comment pains him.

He lamented that Australia had not played a greater leadership role in Myanmar in recent decades.

"It is exactly the kind of country we should be working with and exactly the kind of military you would want to have exposed to the way our military operates, but right now, given what has occurred to that minority, I think it's totally untenable," he said.

Defence department officials last year told a Senate estimates hearing that the Australian government was retaining defence cooperation with Myanmar to help build capacity and professionalism.

The foreign affairs department said it considered Australia's military cooperation with Myanmar at the "minimalist end of the spectrum" and pointed out that joint military exercises and weapon sales were banned.

Myanmar is predominantly Buddhist and Rohingya Muslims do not have citizenship and face entrenched discrimination.

The country is making a rocky transition to a civilian government after 49 years of military rule.

Australian Associated Press