It will not even use wool from sheep that have been subjected to clips the Australian wool industry has developed as an alternative to traditional mulesing.

The company declared its position this week in a letter to the People for the Ethical Treatment of Animals in the United States, which has been successfully pressuring clothing labels to boycott Australian wool since 2004.

Last month, the Federal Minister for Agriculture, Tony Burke, wrote to Adidas, saying Australia was developing alternatives to mulesing, but millions of sheep would die agonising deaths if it was stopped immediately.

PETA insists there are already viable alternatives such as sheep bred with naturally bare breech areas that do not need to have flesh cut away to protect them from burrowing blowfly maggots.

"Three cheers for Adidas for refusing to support unnecessary and cruel lamb mutilations down under," PETA declared on its website yesterday.

Adidas's decision is controversial because the German company has refused to buckle to animal rights campaigners over its use of kangaroo leather in football boots.

Simon Millar, the marketing director of Adidas Australia, said the mulesing boycott was part of the company's policy to ensure ethical production.

John Kelly, the executive officer of the Kangaroo Industry Association, said Adidas was not planning to abandon kangaroo leather because "they know [the industry is] sustainable and humane".

This year the kangaroo industry is allowed to shoot 3.65 million animals.

Maryland Wilson, the president of the Australian Wildlife Protection Council, said it was outrageous the Federal Government opposed whaling but sanctioned the "cruel" kangaroo kill that supplies Adidas.

"Unless Australia stops killing kangaroos, we are going to see a sudden drop of population to the point of no return," she said.