Former prime minister Paul Keating has strongly criticised incoming US Secretary of State Rex Tillerson, accusing the Republican cabinet nominee of threatening to "threatens to involve Australia in war with China".

In a statement released to reporters today, Mr Keating said the Australian government should reject Tillerson's position that China needed to be sent a "signal" to cease construction of military outposts on small islands in the disputed waters, characterising his comments as "ludicrous".