A LEADING bank has warned that more Australian diplomats are needed in Asia to cope with a massive geopolitical transformation, as some local Chinese provinces will eventually have a bigger economy than that of Australia.

The call comes as the Foreign Affairs Department concedes that Australia has the fewest overseas embassies of any comparable country, despite record numbers of Australians travelling abroad.

ANZ Bank has used a submission to a parliamentary inquiry on the country's official representation overseas to call for a boost in the number of diplomats posted in Asia who speak local languages.

Alex Thursby, chief of ANZ overseas operations in the Asia-Pacific region, Europe and the US, said Australia needed a greater diplomatic presence to help business and exports in big overseas markets.

''ANZ believes we need to increase our focus and presence in the Asian region … we also cannot ignore the growth of regional power centres within countries in our region,'' Mr Thursby wrote.

''Cities and regions in China, particularly inland cities, and India are growing rapidly and becoming large economies in their own right. Over the next 20 years, some Chinese provinces will grow to have economies as large as second tier developed nations such as Australia and Canada.''

The Labor Party's ACT branch also pitched for extra resources for the Foreign Affairs Department, saying, ''Staffing levels have been declining and are now critical.''

A Foreign Affairs submission to the inquiry says Australia has 95 overseas posts in 77 countries - the bulk in Europe and south-east Asia. The country has 12 per cent of its diplomats in north Asia, which includes China, as compared with 21 per cent in Europe.

Language skills are also skewed to European languages, with 157 French speakers, 84 Spanish, 58 German, 90 Mandarin and Cantonese, 53 Japanese and 94 Indonesian.

But the department also notes it has suffered a 5 per cent cut in staff numbers since 1996, ''while the range and intensity of the department's activities have risen over recent years in response to government priorities''.

Almost one in two Australians now hold a passport, with a record of about 1.8 million passports issued last year.

Several countries with embassies in Canberra - including Ukraine, Morocco, Venezuela and the Czech Republic - also made submissions calling on Australia to open a post in their capitals.