Australia's most decorated Olympian Emma McKeon says it is unfair for "biologically male" swimmers to compete against female athletes.

In March, American swimmer Lia Thomas became the first transgender woman to win an NCAA title — the top college swimming competition in the US.

Five-time Olympic gold medallist McKeon was questioned about transgender athletes during a women in sport event at Griffith University on Thursday.

"I personally would not want to be racing against someone who is biologically a male," she responded.

"I have not had to, and at the moment I think it is just in the college system in America."

'You want to be inclusive'

The 27-year-old, who won four gold and three bronze medals at the 2020 Tokyo Olympics, said the sport needed to set out rules balancing inclusion with fairness.

"I do not think that I am going to have to race against a trans swimmer. I do not think it is going to come to that point," she said.

"But I think it's definitely up to the sports. You want to be inclusive, but you can't have the females racing against someone who's biologically male.

Swimming Australia has conceded that it needs to do more to provide clarity around transgender athletes in the sport.

"We've done a lot of consultation over the last two years and a lot of work in this area, but also more discussion needs to be had," Swimming Australia president Tracy Stockwell told ABC Sport.

"We are an inclusive sport. We have a diversity and inclusive policy, but also need to ensure fairness for all of our athletes as well."

The IOC advises all sports to consider transgender inclusion on a case-by-case basis, with special consideration to the unique characteristics of individual sports.