Nine Australian special forces soldiers have been wounded, one with life-threatening injuries, in an ambush by Taliban forces in Afghanistan.
Defence force chief Angus Houston said it was fortunate that no Australians had been killed in the overnight battle.
"It is a very dangerous place and we were involved in an activity with other forces. I guess we were ambushed and this is what happens," Air Chief Marshal Houston told reporters.
The battle occurred overnight in Oruzgan Province.
Air Chief Marshal Houston said he could not discuss operational details because the mission was continuing.
"We have seen we are getting towards the end of the campaign season as they call it. We are up against a very determined adversary," he said.
"As always, our people are doing a great job and they have been very successful in recent times. Unfortunately, from time to time, we will have casualties."
Prime Minister Kevin Rudd, speaking at the Australian War Memorial at a ceremony commemorating the Battle for Australia Day, acknowledged the sacrifice of Australian soldiers, past and present.
"We have had news this morning that Australian forces serving in Afghanistan have been engaged again in heavy fighting against the Taliban," he said.
"This fighting has seen nine Australian troops injured, some seriously. Our thoughts and our prayers are with our troops, with their families and their loved ones."
A defence force statement said one soldier had life-threatening wounds, five had serious wounds and three were slightly wounded.
They were part of an ongoing Special Operations Task Group (SOTG) operation to disrupt Taliban activity at the time.
Defence spokesman Brigadier Brian Dawson said the wounded soldiers were given immediate first aid by members of their patrol and evacuated by helicopter to medical facilities.
An unspecified number of Taliban extremists were killed in the battle.
"All nine soldiers have been evacuated from the area of the contact and are receiving the best possible medical care at present," he said in a statement.
"Our concern remains with the soldiers in the field and ensuring we do not jeopardise them through the release of information that could be exploited by our adversary."
The soldiers' families have been informed.
Defence said further details would be released when the operational situation allowed.
Australia has about 1,000 troops in Afghanistan, including a 300-member special forces group comprising members of the Special Air Service Regiment and the Commando Battalion.
Opposition defence spokesman Nick Minchin said he saluted the soldiers' courage.
"Our thoughts are with these nine wounded Australian soldiers, especially the soldier who has suffered life-threatening wounds. Our thoughts are also with their families at what must be a very distressing time," he said in a statement.
"We wish all of these troops a full and speedy recovery."
Senator Minchin said the increase in activity by the Taliban demonstrated the need for the Coalition in Afghanistan to maintain its resolve and stand up to Taliban extremism.
Prime Minister Kevin Rudd has told parliament that the Australian soldiers wounded in Afghanistan have been part of vital mission.
"This action and the toll it has taken on these members of the Australian Defence Force underscores the importance and the dangers of the vital mission they're undertaking on behalf of us all in Afghanistan," Mr Rudd told parliament
"They are engaged in a vital mission. The Taliban can never again be allowed to use Afghanistan as a training ground, a hiding place or a launching pad for terrorist operations around the world.
"It's the men and women of the Australian Defence Force like those who put themselves in harm's way last night that are taking the fight to this enemy of us all."
The prime minister said the troops are also helping Afghanis in Oruzgan in construction, teaching and mentoring.
Opposition Leader Brendan Nelson endorsed Mr Rudd's remarks.
"I join with the prime minister in ensuring that the political will and resolve of this parliament is as firm as it has ever been to see this through and see that we are able to liberate the people of Afghanistan," Dr Nelson told parliament.