An Australian nurse and fertility specialist has been arrested for allegedly running an illegal surrogacy service in Cambodia, the country's anti-human trafficking police said on Sunday.

The arrest was made just weeks after Cambodia became the latest country to ban commercial surrogacy.

Tammy Davis-Charles, 49, was arrested on Friday along with two Cambodians during a raid on a rented house in Phnom Penh, Police Colonel Keo Thea, head of the Anti-Human Trafficking Office, told AFP.

"She has been arrested for being an intermediary in surrogacy and for falsifying documents," Keo Thea said.

"Australian people who wanted kids would contact her and she would charge US$50,000 for each request," he said.

Keo Thea said Davis-Charles had moved to Cambodia from Thailand for more than a year, adding she arranged for some 23 Cambodian women to carry babies for Australian couples.

"Five babies have been born," he said, adding that a Cambodian girl received between $10,000 and $12,000 in each case.

Davis-Charles, who is from Melbourne, will be sent to court on Monday for questioning.

She could face up to two years in jail if convicted, Keo Thea said, adding it was the first arrest for surrogacy in Cambodia.

Earlier this month Cambodia banned commercial surrogacy, after curbs on the industry in other parts of the globe sparked a local boom in the unregulated baby business.

Surrogacy agencies started springing up in the Southeast Asian nation after former hubs like Thailand and India blocked foreigners from the services following a flurry of scandals and concerns about exploitation.

With cheap medical costs and no laws excluding gay couples or single parents, Cambodia quickly absorbed much of the demand.

But a government edict sent to Cambodian fertility clinics earlier this month said that surrogacy was now "absolutely banned".

The proclamation, signed by the health minister last week, asked all medical professionals to comply with the injunction, though it did not spell out a legal punishment.

Cambodia now boasts some 50 surrogacy agents, a number of which cropped up in the past year, according to experts.

Bangkok's military government passed a law banning foreign couples from using Thai women as surrogates last year after a series of controversies -- including tussles over custody -- tainted the lucrative industry.

In one controversy, authorities discovered nine babies in a Bangkok apartment that had been fathered by a Japanese man using Thai surrogate mothers.