An Australian-led study of more than 10,000 diabetic patients has shown drug Invokana significantly cuts the risk of serious heart problems and kidney failure.

A drug commonly used to treat patients with type 2 diabetes has been shown to protect them against serious heart problems like heart attack and stroke.

It also significantly slows the progression of renal disease, according to a large study of 10,000 patients published in the New England Journal of Medicine.

With coronary heart disease the biggest killer of people with type 2 diabetes, Australian researcher Professor Bruce Neal of The George Institute for Global Health says the findings offer real hope to the thousands of Australians with the disease.

"For years we've had lots of treatments for diabetes that lower your blood glucose but don't really do much else," he said.

"Obviously if you're a diabetic or if you are a doctor caring for people with diabetes what you want to do is protect them against the things that are going to cause them ill health or kill them," Prof Neal told AAP.

Researchers at The George Institute conducted the study to determine the safety of the drug canagliflozin, sold as Invokana, which works to reduce blood sugar levels by blocking the body's reabsorption of glucose.

Most other diabetes drugs work by managing insulin levels.

Not only did they find that is was "safe" but that it reduced the overall risk of cardiovascular disease by 14 per cent and reduced the risk of heart failure hospitalisation by 33 per cent.

There was also a 40 per cent drop in kidney decline, which is very significant because diabetes is the biggest cause of kidney failure.

"Our findings suggest that not only does canagliflozin significantly reduce the risk of heart disease, it also has many other benefits too.

"We found it also reduced blood pressure and led to weight loss," said Prof Neal, who presented the findings at the American Diabetes Association conference in the US on Tuesday.

Patients were, however, twice as likely to suffer from amputations.

"We would cause about 15 people to have an amputation, and 10 of those would have amputations of the toe or a part of the forefoot and five of those would have an amputation above the ankle," said Prof Neal.

"We don't know why there was an increased risk of amputation, and further work is needed in this area."

For now, he says, clinicians are urged to use caution in prescribing this drug to people at high risk of an amputation.

Overall, physicians should be "tremendously reassured" by the results, says co-author Professor Vlado Perkovic, Executive Director of The George Institute Australia.

"What we have done is show that the earlier results were not just a one off. This really is a game changer in the treatment of type 2 diabetes."

A further study on the benefits of canagliflozin related to kidney disease will be published later this year.