She was tried in Beijing in March on espionage charges. Australian diplomats were denied permission to attend the proceedings. No verdict has been announced.
A change of government in Australia for the first time in nine years at May elections has produced signs of a thawing of frosty bilateral relations.
Xiao said on Thursday he had sympathy on humanitarian grounds for Cheng's family, that includes a young son and daughter who live with their grandparents in Melbourne.
"Personally, I have sympathy to her family, her kids and their relatives that they face such a difficult situation," Xiao told Australian Broadcasting Corp.
"On the humanitarian basis, I've been trying to see if I can be help as ambassador to facilitate a possible much easier access" between Cheng and her family or the Australian Embassy in Beijing, Xiao said.
Xiao said his intervention would be "based on humanitarian considerations."
"I cannot get involved with the legal procedure," Xiao said.
Cheng's Papua New Guinea-based partner Nick Coyle said in a television interview last month that Cheng's access to her family was "virtually nonexistent."
"Lei hasn't been able to make a phone call or anything like that to her children, to her parents to any of her loved ones now in two years," Coyle told Sky News.
Australian embassy officials ask for family contact each month but Chinese officials never respond, Coyle said.
"Lei just needs to get home to the kids and kids need their mum," Coyle said.
