Criticising the government's decision to stop war crimes cases against the Sri Lankan President Mahinda Rajapakse, the Australian Tamil community on Wednesday said they felt betrayed and disappointed.

"The decision is disappointing. We also feel quite betrayed as well," said Sam Pari, national spokesperson of Australian Tamil Congress.

"We actually have a magistrate who has set a date for the hearing and to think that the Australian legal system will allow this to take place but for a politician to then say that these proceedings can't go forward is very, very disappointing," she said.

"We also feel quite betrayed as well. We have an eyewitness who has found the courage to step forward."

The reaction came after the Attorney General Robert McClelland yesterday refused to permit proceedings against Sri Lankan President after a 63-year-old ethnic Tamil Jegan Waran filed charges in a Melbourne Magistrates Court against him.

According to ABC report McClelland had said the president was legally entitled to diplomatic immunity. Rajapaske is currently in Perth for the Commonwealth Heads of Government Meeting (CHOGM).

A former Australian diplomat Bruce Haigh said McClelland was wrong to claim he would have breached international law if he allowed a war crimes case against the Sri Lankan president to proceed in Australia. Haigh said it was clear McClelland's decision has been purely based on politics.

"He doesn't want to do anything that would upset the apple cart as far as CHOGM's concerned," Haigh said.

"But in terms of international law and in terms of Australian law, no, he would not be in breach. He hasn't looked at the law but he's reacted politically to the situation because it's CHOGM. CHOGM should be a time to discuss human rights issues," Haigh said.

Jegan Waran, who lives in Sydney and worked as a volunteer in Tamil-held areas, said Sri Lankan armed forces deliberately attacked clearly marked civilian infrastructure such as hospitals.

"Patients were killed, and patients who were in the hospital were killed, and there were other patients waiting for treatment - they were killed," he was quoted as saying on ABC.

"There was a medical store where they kept the medicines. Those were destroyed - scattered all over the place you can see. Ambulances were destroyed. I have seen that personally."

Sri Lanka's government has repeatedly denied allegations of war crimes. Former Liberal prime minister Malcolm Fraser who is also attending CHOGM in Perth, said he believed that the Federal Government has failed to take a strong enough stance against alleged human rights abuses on both sides of the conflict in Sri Lanka.

"To this point I think we have got one leg each side of a barbed wire fence. That's a rather uncomfortable position to be in you've ever tried it," he was quoted by the ABC as saying.

Fraser, being the prime minister, used CHOGM to push for Rhodesia's independence as Zimbabwe. "If I single out Robert Mugabe for a particularly warm welcome, it's because his presence here is a tangible reminder of the effectiveness of the modern Commonwealth," Fraser had said at the time.

Fraser believes that the Commonwealth forum can and must be used for change. "... the Commonwealth has, in the past, done substantial things, and it can do it again. I do believe there needs to be a fuller and better inquiry into actions of the government and of the Tamils, because the reports that have come out from not only the UN Human Rights Commission but also from the International Crisis Group suggests that there have been major atrocities by both sides in this conflict."

Fraser said stronger action needs to be taken, but he doesn't think suspending Sri Lanka from the Commonwealth is the answer. "Under current circumstances, holding the Commonwealth Heads of Government Meeting in Sri Lanka in two years' time is quite inappropriate," he said.