By Lewis Jackson

SYDNEY The Reserve Bank of Australia will not start any new contracts with PricewaterhouseCoopers (PwC) Australia until a scandal over the firm's misuse of confidential government tax plans is sorted out, the central bank's governor said on Wednesday.

The "big four" firm is on the defense after a former Australian tax partner who was consulting with the government on laws to prevent corporate tax avoidance shared confidential drafts with colleagues to drum up business around the world.

Reserve Bank of Australia (RBA) Governor Philip Lowe told senators at a parliamentary hearing he was "appalled" by the breach and the RBA would not line up PwC for any work until the bank was satisfied the issue had been resolved.

"(We) have taken the decision to enter no new contracts with PwC until a satisfactory response has been forthcoming," Lowe said.

"A satisfactory response includes both complete transparency and accountability for those involved."

The Reserve Bank will continue an existing consulting contract for audit and risk management services because of the costs of cancelling the contract.

Annual spending with the professional services firm had ranged from roughly A$100,000 to A$900,000 over the past four to five years.

The decision came a day after Treasury Secretary Steven Kennedy told the same senators the breach was "clearly disturbing" and the department would review a PwC audit contract worth almost A$1 million that expires at the end of this year.

The firm's acting CEO Kristin Stubbins, who took the job after her predecessor resigned over the scandal earlier this month, on Monday apologised in an open letter and said nine unnamed partners had been directed to take leave.

(Reporting by Lewis Jackson; Editing by Sonali Paul)