The lawyer for a former Australian serviceman charged with a war crime relating to his deployment in Afghanistan has argued his client should be granted bail because he is "extremely vulnerable" to Islamic extremists.

The 41-year-old, who can not be named under an interim non-publication order, is the first current or former Australian soldier to be charged with the war crime of murder under Australian law. 

The Australian Federal Police (AFP) alleges he murdered an Afghan man while deployed to Afghanistan with the Australian Defence Force (ADF).

The ABC understands the charges relate to the shooting death of Dad Mohammed in May 2012, in central Uruzgan province.

The killing was revealed by a Four Corners and ABC Investigations report which broadcast footage of the alleged shooting.

In Sydney's Downing Centre Court, the defendant's lawyer, Philip Boulten SC, argued the former SAS trooper should be granted bail because of concerns for his safety. 

"Wherever this man is going to be held in the prison he is likely to have to mix with people in prison who sympathise with the Taliban or with other Islamic extremist groups," he told the court.

"This is not a simple case of an ex-Army officer being in prison, this is a case of an ex-Army officer being in prison charged with this crime. 

"He is extremely vulnerable where he is at the moment." 

Mr Boulten said when his client was arrested by the AFP last week, he was initially taken to Goulburn Prison and placed in the facility's "medical clinic". 

"Goulburn is one of the most secure jails in Australia … a supermax prison that typically holds people charged with terrorism offences and the like," he said. 

"[The accused] was not placed in supermax, he was not placed in a normal segregation cell, he was taken to the medical clinic, in a very irregular placement.

"You are entitled to draw inferences from actions and the actions of the prison authorities to shepherd this man into the medical clinic are almost certainly due to the risk [posed to him]." 

Mr Boulten said his client is now in a segregation cell at another prison and was told he was placed there because staff "didn't want anyone taking a shot at him". 

He went on to reference the case of Bourhan Hraichie, who carved an Islamic state-inspired slogan into his cellmate's forehead.

"Mr Hirachie attacked the other man in April 2016 in circumstances that can only be described as horrifying, that included what I would describe as waterboarding and etching of murals and figures into the victim's forehead, because he was an ex-soldier," Mr Boulten said.

"That is just an illustration of the risks posed to former personnel." 

Mr Boulten said if his client remained in custody it would also present significant problems in preparing their defence, as he expected there to be evidence pertaining to national security. 

He added that his client had led an unexceptional and law-abiding life for years while the matter was under investigation, and there was no flight risk.

The prosecutor argued these were not exceptional circumstances that justified the granting of bail. 

"The very nature of a war crime offence … is it's going to be committed by a person who likely works for the defence force, a person of good character, a person with an unblemished criminal record," Mr Flood told the court. 

"It's likely to be a common feature of any accused who's charged with a war crimes offence that they don't cause any difficulties to the Australian community." 

A decision concerning the defendant's bail status is expected to be handed down on Tuesday morning. 

If found guilty, the 41-year-old veteran could face a maximum penalty of life imprisonment. 

In a statement, the Office of the Special Investigator and the AFP said the two organisations were together investigating allegations of criminal offences by ADF personnel in Afghanistan between 2005 and 2016, relating to breaches of the Laws of Armed Conflict.