ELECTRONIC health records are needed to stop Australian soldiers wounded in war zones from falling through the cracks of bureaucracy during their rehabilitation, a review says.

A review by KPMG found the Defence system failed when it came to rehabilitation, transition to normal life, and compensation for soldiers wounded in Iraq, Afghanistan and other warzones.

But it was good at providing immediate medical care to wounded troops, the 280-page review released on Monday afternoon revealed.

The review of the Support for Injured or Ill Project, conducted from August to December 2010, found many troops wounded in Afghanistan were not receiving enough support because of the complex bureaucratic systems.

The review also highlighted poor communication between the Defence and Veterans' Affairs departments as a major problem.

More than 1100 soldiers required rehabilitation plans for musculoskeletal injuries in 2009–10, the review says.

Mental health disorders accounted for 577 cases, followed by knee disorders 558, back disorders 415 and obesity 167.

The review said the processing of veterans' income support took on average 43 days, which was longer than the target of 32 days.

It recommends introducing procedures to fast-track the processing of higher priority claims.

Since the review, Defence has begun streamlining its bureaucratic systems to improve efficiency and cooperation between it and Veterans' Affairs.

The review recommends Defence use electronic health records to simplify soldiers' transition to civilian life and help streamline interaction with the Department of Veterans’ Affairs.

The report says Defence health policy is confusing, contradictory and difficult to understand.

It says that what is missing is an overarching user guide that maps how individual health policy interacts.

Injured soldiers often had multiple case managers for medical, rehabilitation and compensation claims and this was confusing.

The Medical Employment Classification Review Board process took too long in many cases, with soldiers feeling like their "life was on hold while waiting for a determination".

"Members feel unsupported by Defence... This is especially so when a member is ready for and wants to be medically discharged," the report said.

Some members began exhibiting "recalcitrant behaviour" because they were frustrated by the wait, and in some cases delays exacerbated underlying mental issues, the review said.

The review board should meet more often to clear a backlog of cases, the report said.

Major General Gerard Fogarty said the report concluded that the current system is generally good and there was a high return to work rate for rehabilitated Defence Force members.

"Work to implement the 31 recommendations from the review is well underway, and much of the work is expected to be complete this year," he said in a statement.

He said one of the recommendations – to set up advisory services on military bases to raise soldiers' awareness about the support available – was already in full swing.