Australia's air safety watchdog warned Friday of the potential dangers of lithium battery-powered devices after an iPhone that had undergone unauthorised repairs started smouldering on a flight to Sydney.

In the incident last November on Australian carrier Regional Express a crew member used a fire extinguisher on a passenger's phone that began overheating and giving off smoke in the cabin.

An investigation by the Australian Transport and Safety Bureau (ATSB) found that a small metal screw had been misplaced in the phone's battery bay.

The stray screw punctured the battery casing, causing an internal short circuit that led to overheating, which increased as the battery reacted and began to break down.

It found that an "unauthorised repair facility" had failed to exercise appropriate quality control on the iPhone when it was being fixed.

The ATSB said passengers should be aware of the safety measures related to flying with lithium battery-powered devices.

"When travelling with mobile phones, laptops and other portable electronic devices, or just their batteries, passengers should, wherever possible, carry them in the cabin, and not in checked-in baggage," it said.

"The incident also highlights the importance of good maintenance and repair processes for these devices, and the risk of using non-authorised repair agents."

The report did not say if the danger was limited to travelling in pressurised air cabins but said there was no previous record in the ATSB's databases of a similar incident happening on an aircraft in Australia.