The race to find an alternative to sheep mulesing by 2010 has hit a major hurdle, with the Australian Quarantine and Inspection Service (AQIS) banning a key product being used in trials.

Australian Wool Innovation (AWI) has been injecting collagenase into sheep's backsides to inhibit the growth of wool.

But the trials have now been dumped, with AQIS warning the biological agent poses a biosecurity risk and could carry mad cow disease.

AWI's Scott Williams says while it is costly to lose the research, other trials are in progress.