Australia expects to make a decision within weeks on whether it will seek to join the China-backed Asian Infrastructure Investment Bank (AIIB), Prime Minister Tony Abbott said on Saturday.

Australia's decision on whether to become a founding member of the institution risks upsetting either key strategic allies the United States and Japan, or top trading partner China.

Britain this week said it has sought to become a founding member of the AIIB because it was in its "national interest", making it the first Western nation to embrace the institution, which would finance infrastructure projects in the Asia-Pacific.

"Our position all along has been that we are happy to be part of some thing which is a genuine multilateral institution such as the World Bank, such as the Asia Development Bank. What we are not prepared to do is to sign onto something which is just an arm of one country's foreign policy. " Abbott told Sky News Australia.

"We're looking very carefully at this and we'll make a decision in the next week or so. I would like to think that it is possible for this to a be a genuine multilateral institution and I think it could well be an important part of bringing China fully into the international community."

Twenty-one countries were represented at the announcement of the bank in October - Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka,Thailand, Uzbekistan and Vietnam.

Indonesia later said it would join, and China said earlier this year the number of founder members had risen to 26.

But Japan, Australia and South Korea, the other notable absentees in the region, have held back ahead of a March 31 deadline.

Japan, China's main regional rival, has the highest shareholding in the Asian Development Bank along with the United States, while Australian media said Washington had put pressure on Canberra to stay out.

Abbott said he hoped many countries, including Japan and the United States, would join the AIIB if was set up as a geniune multilateral institution.