Prime Minister Kevin Rudd -- avoiding any comment on the sex scandal involving actress Tania Zaetta and Australian troops in Afghanistan -- said the entertainer was free to sue the defence department.

"Zaetta was entitled to exercise her legal rights by suing the defence department," Rudd said. "The defence department has apologised in terms of their handling of this particular document," Rudd was quoted as saying by The Australian.

"There is a full defence investigation under way in relation to two matters -- what transpired there [Afghanistan] and, secondly, on the question of the actual handling of this document," he said, adding, "Let's wait until all the facts are on the table."

Meanwhile, Zaetta, who has worked in films like Salaam Namaste [Images] and Mr Black, Mr White, slammed the allegations that she had sex with Australian special forces soldiers during her recent tour of war-ravaged Afghanistan.

According to Herald Sun, Zaetta has confessed that she slept in the same tent as the men while touring Afghanistan but denied her involvement in a military sex scandal. Now, the Federal Government faces a potential compensation payout to Zaetta after naming her at the centre of the sex-scandal investigation that has rocked the Defence Force, the newspaper said.

Last night, the actress said she had briefed lawyers, strongly denying unsubstantiated allegations that she had sex with Australian soldiers during a 17-day concert tour in the Middle-East last month.

"I don't know where you would go. On a military base, it is a big concrete block in the middle of the desert, barbed wire everywhere, 24-hours a day there are people walking everywhere," Zaetta said. "You were never alone with any soldier. You are in full view of everyone the entire time."

Australian Defence department admitted it breached privacy rules by naming Zaetta in a briefing document intended for Defence Minister, Joel Fitzgibbon.

Meanwhile, fellow entertainer Anderson had denied that he was the source of the allegations. "I am not in a position to make allegations or accusations against anyone," Anderson said, adding, "I flirted with every woman in uniform over there, regardless of size, shape or religious persuasion."

Zaetta, who hosted the 1990s television series Who Dares Wins before enjoying success in Bollywood, said she called Anderson and asked him if he spread the rumour. "I asked him and I believed him when he said no. He wasn't sure where it came from," she said.

Asked if other performers might have been jealous of the attention she had on tour, Zaetta said, "Perhaps there was... I have thought of that myself and it is ridiculous because I don't think I am above anybody else at all."

The Australian Defence department had confirmed that a probe was under way.