Melbourne: A highly poisonous fungus, with toxins that can be absorbed through the skin, has been identified for the first time in the rain forest near the Great Barrier Reef, Australian scientists said on Thursday.

The Fire Coral fungus, which is better known in South Korea and Japan as being among the world's most poisonous mushrooms, was found near Cairns in the northern state of Queensland, scientists from James Cook University said.

"If found, the fungus should not be touched, and definitely not eaten," said Matt Barrett, an expert on fungi at the university's Australian Tropical Herbarium.

"Of the hundreds or so toxic mushrooms that are known to researchers, this is the only one in which the toxins can be absorbed through the skin."

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If eaten, the distinctive red fungus causes a horrifying array of symptoms: stomach pain, vomiting, diarrhoea, fever and numbness are followed over hours or days by the skin peeling off the hands and feet, and the shrinking of the brain, he added.

It was most likely that the fungus occurred naturally in Cairns, although instances have also been reported from Indonesia and Papua New Guinea, Barrett said in a statement.

"The fact that we can find such a distinctive and medically important fungus like Poison Fire Coral right in our backyard shows we have much to learn about fungi in northern Australia," he added.

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