In April, the Royal Australian Mint issued 85,000 sets of gold and silver $2 coins to mark the 50th anniversary of Australian troops withdrawing from southern Vietnam.

South Vietnam's yellow and red flag is banned by the Vietnamese government.

"We regret and strongly protest the Royal Australian Mint and Australia Post for issuing items with the image of the yellow flag -- the flag of a regime that no longer exists," Vietnam Ministry of Foreign Affairs deputy spokeswoman Pham Thu Hang said in a statement on the government's official Facebook page on Thursday.

She said Vietnam has discussed the matter with the Australian government and requested a halt to the coins' circulation.

Australia and Vietnam flagged an intention to elevate their bilateral relationship to a comprehensive strategic partnership during National Assembly chairman Vuong Dinh Hue's visit to Canberra last November.

"This is completely inconsistent with the good development trend (of those efforts)," the spokeswoman said.

The Royal Australian Mint defended the coins on Friday.

"The design of the coin reflects the colours of the ribbons of the service medals awarded to Australians who served in Vietnam, including the Vietnam Service medal, introduced in 1968," the mint said in a statement to AFP.

"The Australian Government does not recognise the flag of the former Republic of Vietnam."

More than 60,000 Australian soldiers served in the Vietnam War, 523 died and almost 2,400 were wounded, according to the country's war memorial website.

It was Australia's longest involvement in a war during the 20th century and it became deeply unpopular with thousands marching against Australia's role in the early 1970s.

Australian troops withdrew from Vietnam in 1973, two years before the Communists from the north stormed Saigon and declared victory on April 30, 1975.