Australian scientists are looking for the country's ugliest merino lambs in an effort to create better quality wool.

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Scientists from the South Australian Research and Development Institute and the University of Adelaide say the 'Xtreme' sheep may hold the genetic key to securing Australia's wool industry, Sky News reported.

Adelaide University professor Phil Hynd says these lambs are usually culled because they may have uneven wool, strange fibers, clumps of wool that fall out, bare patches, no wool, unusual crimp, extra-lustrous wool or even highly wrinkled skin.

"These lambs, typically viewed as worthless, are in fact highly valuable to the industry, because one of the most efficient ways to identify the genes that impact on certain wool traits is to study animals that have rare or extreme features," Hynd said in a release.

Hynd estimates that about 100 'Xtreme' lambs born this year will exhibit the necessary traits. So far, however, only 10 ugly sheep have been found this lambing season, Sky News reported.