Melbourne University researcher Dr Gillinder Bedi says the small number of participants in current trials likely skew results and federal funding would be best directed towards sizing up.

Her comments followed Health Minister Greg Hunt's announcement this week that $15 million will be available to researchers to investigate the potential of psychedelics to treat mental illness.

The Health Department said strong evidence had emerged internationally that ketamine, psilocybin, and MDMA offer promising solutions.

Psychedelic Research in Science and Medicine Dr Stephen Bright said several studies already approved in Australia could double their scope with a fraction of the grant funding available.

Dr Bedi said trials tended to have relatively small sample sizes so results should be viewed with a little scepticism.

"I think it's a bubble," Dr Bedi said.

"That's not to say I don't think it works, I think it's possible it does. I don't think it probably works anywhere near as well as has been shown so far."

Dr Bedi said results had been published whereby a "waitlist" control group was used, rather than a control group given a placebo drug.

She said therefore people desperate for treatment were made to keep waiting, potentially leading to worsened mental health reporting from the control group.

The participants who were chosen to be administered the MDMA were also likely to report better outcomes because psychedelic-assisted therapy had been so hyped up, she said.

Dr Bedi said the best way to combat the hype was for big studies run by sceptical researchers with no connection to the advocacy.

"It's a blessing and a curse," Dr Bedi said.

"The blessing is that without the advocates this work would not have been done.

"Some of them have made this their life mission and it's to their credit that they've gotten as far as they have.

"But I think the downside of that is it creates a non-financial conflict of interest, whereby they so strongly believe that it already works that you produce very strong expectancies which can seriously affect outcomes."

Dr Bedi said it would cost $2.5 to $3 million for a good clinical trial in Australia and funding two such trials in each grant round would be the best use of the money.

She has been transparent in her plan to apply for funding for MDMA research in Melbourne.

Former Australian Defence Force member Eternity Hausen has welcomed the federal funding announcement.

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Ms Hausen and fellow ADF member Emily Hetherington will launch Enlighten Mental Health in May, an online service offering alternative treatments for service personnel and the public.

Ms Hausen said they were currently partnering with general practitioners in Canberra to provide psychedelic-therapy for people experiencing PTSD.

"It is early days, however, we are currently in talks with leading researchers at universities Australia wide to discuss a joint proposal for clinical trials," Ms Hausen said.

"We hope to hear from the ADF health and psychology sections soon to discuss how we can work together to ensure those ADF members who need this support are able to participate."

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