An offensive video shown to New Zealand peacekeepers in Bougainville has brought red faces and a full investigation within the Australian Defence Force.

The home video targeting women and gays has put discrimination policies under a microscope, with progress made by New Zealand's armed forces held up as a model for Australia to match.

The 10-minute video shows mostly male defence personnel dressed as large-breasted women parading on decorated military vehicles, making crude jokes and simulating indecent acts.

Made in March, the tape features up to 20 members of Australia's peace monitoring group in a take-off of Sydney's Gay and Lesbian Mardi Gras.

Rodney Croome, the director of Australia's Council for Gay and Lesbian Rights, said the video prompted complaints when it was shown to Australian, New Zealand, Fijian and Vanuatuan peacekeepers and some diplomats.

The video was professionally edited and went beyond gangshow lampooning, he said.

"People have said it's just soldiers letting off steam, but when it's viciously degrading minority groups and women it's not on.

"It is not only tasteless but very derogatory ... The worst bits could not be shown on TV."

The issue showed up the Australian Defence Force's lack of progress in addressing discrimination and harassment compared with its New Zealand counterpart.

"From our perspective, the New Zealand Defence Force is a model and deserves a really big tick," Mr Croome said in Canberra.

In Wellington, Defence Force spokeswoman Deborah Mulliss said initiatives had been put in place in the past decade to ensure minorities and women did not feel marginalised.

Policies were reviewed after the 1998 gender integration audit, which followed complaints of harassment from women sailors on the frigate Wellington.

Deborah Mulliss said all camps and bases now had anti-harassment advisers, trained mediators and investigators. Recruits were advised on acceptable behaviour and those in command were fully trained.

"There's quite a detailed infrastructure in place to support staff who have issues about other people's behaviour.

"Being in a place like Bougainville, there is not a lot to do," she said.

"It's about directing people's energies in the right direction.

"They play an awful lot of sport ... and those sorts of activities to let off steam."

An Australian Defence Force spokesman said all steps would be taken to prevent a repeat of the video.