The faults include combat jackets that glow in the dark, giving enemies an easy target, and body armour that cracks easily.
The helmets issued to soldiers have harnesses that are "worn, rusted and damaged" and are shaped in a way that makes it "impossible to sight a live claymore (landmine) in the prone position" while wearing them.
The documents reveal that the safety of SAS members -- on deployment in Iraq and Afghanistan -- has been compromised by body armour that does not match the grey colour of their wetsuits for underwater operations.
In one case, a protective vest called Ultima issued to soldiers was so faulty its use was "suspended immediately" for troops at home. But those in the field were forced to wear the vest until a replacement became available.
"The operational use of the armour is to be suspended as soon as practicable," the reports say.
The reports reveal that faulty equipment is a more serious and widespread problem than has been admitted by the Government, at times jeopardising the operations and safety of troops.
A Defence spokesman yesterday defended the performance of the Defence Materiel Organisation, the agency that buys combat gear, saying it had followed "strict government procurement guidelines".
"Army is committed to continual development and improvement of combat clothing and personal equipment," he said.
The documents warn that the new combat jackets issued to troops not only failed to offer camouflage protection but were "highly visible". "It appears as a bright glowing beacon when observed through night-fighting equipment," the reports say.
They reveal that no combat jackets fit women. "Females are forced to wear a jacket several sizes too big to accommodate hips. This leads to sleeves completely covering hands."
The jackets were highly flammable and collected such an amount of "dirt, sticks and prickles" in the field that they would be "unsuitable for operations overseas, due to the likelihood of AQIS (Australian Quarantine and Inspection Service) requiring complete removal of all plant matter".
The documents say the combat body armour used by troops in Iraq was faulty, with the plastic clips used to fasten the vest to the torso "continually fracturing and breaking". And the ballistic body plates designed to stop small arms fire were subject to cracking at the front and the back.
The reports warn that the helmets used by the SAS were poorly designed because, during night assaults with aerial fire, soldiers were forced to use tape to attach strobe lights to the helmets to aid target identification.
"This affects operational performance and safety," they say.
"The Howard Government's defence spending priorities have become outrageously skewed when they are willing to have a billion-dollar open chequebook for Iraq while our dedicated serving men and women are equipped with badly designed clothing and faulty gear."