Israel has confirmed it jailed a foreigner in solitary confinement on security grounds who later committed suicide, as Australia admitted on Thursday it knew one of its citizens had been secretly held.

The man, identified by Australian media as Mossad agent Ben Zygier, known as "Prisoner X", died in a secret prison near Tel Aviv in 2010 in a case Israel went to extreme lengths to cover up, imposing media gag orders.

Israel broke its silence after the Australian Broadcasting Corporation said the man was a dual Australian-Israeli citizen and reported that he was a spy for Israel's intelligence agency.

"For security reasons the man was held under a false identity although his family was immediately informed of his arrest," Israel's justice ministry said.

He was found dead in his cell and a judicial inquiry ruled he took his own life, the ministry added in a statement, although it did not reveal his identity or the charges against him.

"The prisoner was held in jail under a warrant issued by a court," said the ministry.

Australian Foreign Minister Bob Carr initially said he only became aware of the man's incarceration after his death, but on Thursday admitted the government knew of his detention at the time. He told a parliamentary committee the information was gathered through intelligence channels.

He said at no stage did the government receive any request for consular support, adding that he would determine Canberra's next step after receiving a full report from his department into the case.AFP