The highest levels of the NSW Police have been plunged into controversy after the inquiry heard evidence of potentially illegal bugging of corruption suspects and Mr Kaldas launched an extraordinary attack on the Ombudsman charged with investigating.

The sensational evidence on Friday included an admission by deputy commissioner Catherine Burn that a team she was involved with a decade ago secured a warrant to bug Mr Kaldas without any evidence of wrongdoing presented to the court.

Despite this, she claimed that she had at the time "reasonable suspicion" and "reasonable belief" Mr Kaldas was involved in or had knowledge of corrupt or criminal conduct by police and, when challenged, offered to give the inquiry a private briefing.

Mr Kaldas had earlier in the day named Ms Burn - who has long been his chief rival to become the next NSW police commissioner - as part of an internal affairs team whose activities were "at best improper and probably illegal".

Mr Kaldas also sensationally claimed NSW Ombudsman Bruce Barbour - who the NSW government has granted special powers in 2012 to investigate the long-running bugging scandal - has mounted an "a well planned attack" to silence him as a whistleblower.

Mr Kaldas accused Mr Barbour of "methodology used by the McCarthy era" and declared: "I hold fears of his intention towards me".

However, Premier Mike Baird is refusing to involve himself in the rapidly escalating dispute, arguing the government did not support the parliamentary inquiry and that he was "still taking advice" from Mr Barbour.

A spokesman said the government "will not be providing a running commentary on the evidence" from the parliamentary inquiry.

"The NSW government continues to rely on direct advice from the Ombudsman, who is independently investigating this matter and has committed to presenting a public report in the first half of this year," he said.

The parliamentary inquiry is examining the conduct and progress of a two-year investigation by Mr Barbour into an internal police investigation into Operation Mascot/Florida - a covert surveillance operation against allegedly corrupt police between 1999 and 2001.

The internal investigation, Strikeforce Emblems, was launched in response to revelations that warrants issued by Supreme Court judges authorising the bugging for Operation Mascot included the name of a journalist and police never accused of wrongdoing.

The inquiry into Mr Barbour's investigation was prompted by concerns about the time taken and whether it had begun to focus on who had leaked documents.

Ms Burn was Team Leader of Operation Mascot, which conducted covert bugging targeted at more than 100 police and civilians during 1999-2001, including Mr Kaldas, now her chief rival to become the next police commissioner when Andrew Scipione retires.

In her evidence on Friday, Ms Burn acknowledged that the lack of evidence presented to the Supreme Court to obtain the warrant for Mr Kaldas was "serious" but denied being responsible for putting together the affidavit supporting the application.

"I didn't have a role in affidavits," she said. "This went through an assistant director and a solicitor. And it was the solicitor's responsibility to check those things off."

Ms Burn denied allegations that have been aired in the media that she had been part of a vendetta against Mr Kaldas.

"I deny absolutely that there was any direction by me or as far as I'm aware of any of the other participating members of the operations committee [of Mascot] that false affidavits be sworn and presented to the court so that illegal warrants could be issued," she said.

Earlier, giving evidence on Friday morning, Mr Kaldas outlined how he had in the late 1990s had a significant falling out with the heads of the internal affairs unit which ran Mascot "in particular Mal Brammer, John Dolan and their team, which included Catherine Burn".

He was placed under covert surveillance by a corrupt former policeman working for Mascot, codenamed M5. During various periods his mobile phone, office phone and the house of his ex-wife and children were all bugged.

Mr Kaldas alleged that the activities of Mascot were "at best improper and probably illegal".

He said he had been told there were two allegations against him, both from about 25 years ago involving teams of which he was the most junior officer. One related to an arrest over an armed robbery, the other that someone had stolen money at a search warrant.

In 2001 the current commissioner, Mr Scipione, was made head of internal affairs with oversight of Mascot.

Mr Kaldas told the inquiry he was summoned to an interview with Mr Barbour for his inquiry, Operation Prospect, on September 5 last year.

"I attended to face an onslaught, a concerted attack on my integrity and credibility," he said.

"I felt that the horrors of Mascot/Florida were happening all over again," he said. "It felt to me like this was a well planned attack to silence me as one of the main complainants."

Mr Kaldas said he had "not done anything that would justify this level of intense, intrusive targeting".

He added: "We the police could not treat criminals this way and neither should we."

Mr Scipione and Mr Madden are due to give evidence next week.