Australian security experts, consumer advocates and privacy campaigners have sounded the alarm over the hundreds of thousands of free smartphone applications that spy on their users.

Lookout, a smartphone security firm based in San Francisco, scanned nearly 300,000 free applications for Apple's iPhone and phones built around Google's Android software. It found that many of them secretly pull sensitive data off users' phones and ship them off to third parties without notification.

The data can include full details about users' contacts, their pictures, text messages and internet and search histories. The third parties can include advertisers and companies that analyse data on users.

The information is used by companies to target ads and learn more about their users. The danger, though, is that the data can become vulnerable to hacking and used in identity theft if the third party isn't careful about securing the information.

Lookout found that nearly a quarter of the iPhone apps and almost half the Android apps contained software code that contained those capabilities.

Australian online users' lobby group Electronic Frontiers Australia spokesman Colin Jacobs said the issue of applications spying on their users "was something that everybody needs to be aware of". Jacobs said that many did not think of their phone as a computer. "Mobiles contain as much personal information as people’s everyday computers do," he said.