The Australian wine industry is lobbying for tax relief to help the country's struggling small and medium-sized wineries.

The Winemakers' Federation of Australia is campaigning for producers who crush less than 1,000 tonnes of grapes a year to be exempt from the wine equalisation tax (WET) on the first 600,000 litres of wine produced. It is reported to have enlisted the help of four South Australian federal cabinet members in its campaign.

While the government has made some attempt to alleviate the tax burden on smaller wineries with its cellar door rebate, producers contend that the WET makes them less competitive compared with larger players who produce higher volumes of cheaper wines.

On a A$25 bottle of wine, the producer pays WET of A$3.79, while a A$15 bottle attracts A$2.29 and a A$10 bottle only A$1.51.