The Rudd Government said it would continue to support Australian Wool Innovation despite the industry group's failure to meet a deadline to abandon the controversial practice of mulesing.

The wool growing industry's peak representative group last week announced it would not be able to meet a deadline to eliminate mulesing by the end of 2010 because a viable alternative had not been found.

The deadline was introduced five years ago as part of an industry-led commitment to abandon mulesing which involves removing skin from a sheep's backside to reduce the risk of flystrike.

Animal rights groups say mulesing is cruel and have launched campaigns calling for a boycott of wool that comes from mulesed sheep.

AWI receives at least $50 million in financial support from government sources each year.

But Federal Agriculture Minister Tony Burke said the decision to abandon the deadline was a matter for AWI and would not affect the government's relationship with the industry group.

"The role of AWI in both R&D and marketing is an important one, and the government maintains its commitment through the RDCs (Research and Development Corporations) to research and develop," Mr Burke said.

He said there were verification systems in place to allow people to ensure the wool they purchased was sourced from sheep that had not been mulesed.

It was important to remember that mulesing was done "for good animal welfare reasons", he said.

"There is nothing good for an animal in dying by being eaten by flesh-eating maggots.

"That's the reality of what can happen in a bad fly season if you have . . . fly-blown sheep."