OTTAWA (CP) - The head of Canada's spy agency says CSIS must expand its ability to work abroad in an era when Canadians increasingly turn up in hotspots as soldiers, hostages and refugees.

Canadian Security Intelligence Service director Jim Judd said Friday the agency needs to beef up its capacity to "operate effectively outside of Canada" in protecting the country's security.

"National borders are only peripherally relevant to the vast majority of threats we deal with now or to the risks to Canadians, at home or outside Canada," Judd told the annual meeting of the Canadian Association for Security and Intelligence Studies.

Judd said CSIS efforts to support the Canadian Forces in Afghanistan, help rescue hostages in Iraq and evacuate Canadian citizens from strife-torn Lebanon represent "a departure from past operations."

"And it is clear that we need to strengthen our future capacity to do more of this nimbly and effectively," he said. "This will entail not only further investments in people but, as well, the infrastructure to support them outside of Canada."

A secret CSIS task force last December called for new resources to bolster the spy agency's work overseas against terrorism.

The internal group looked at how best to manage foreign operations in the future, as well as the necessary personnel and budget.

Public Safety Minister Stockwell Day said in May the federal government would either create a new spy agency or expand the mandate of CSIS.

Day suggested the money needed to launch a new service - likely tens of millions of dollars - would not be a barrier.

Critics of the idea say Canada doesn't need a CIA-style espionage service that meddles abroad, and that the considerable funds would be better spent on other programs.

Sir Richard Dearlove, former head of Britain's foreign spy service, said Friday he's puzzled Canada lacks a stand-alone foreign intelligence agency, and has resisted creating one.

In establishing such a service, Canada could make an important contribution to its national security interests as well as those of its major allies, said Dearlove, who headed Britain's fabled Secret Intelligence Service, better known as MI6, from 1999 until 2004.

He pointed to Australia, saying its external spy service has achieved a high degree of sophistication and success, especially in the Asia-Pacific region.

Dearlove suggested Canada's global reputation as a fair broker would help it establish a credible foreign intelligence service.

"Canada could and should create something specifically Canadian, which as an intelligence collector would reap the benefit of Canada's very distinct international reputation," he said.

"But it's very, very important if this project is to be embarked upon, that it has consensus across political parties and that there is the will to pursue the project over a long period of time."

He estimated it would take 10 to 20 years for Canada to establish a genuine foreign spy outfit.

Dearlove stressed it was not a project for the faint of heart, saying "there's no point in doing it at all if the attitude towards it is risk-averse."