The auction took place at a fundraising event for the Australian Labour Party.
Among the lots up for sale were framed pictures of Kylie that included her knickers and were supposed to have been signed by her.
But in a letter to the Australian newspaper the Sun-Herald, Kylie said she had no knowledge of the items: "I was not aware of the existence of these framed items, where the photographs came from, the auctions, the MPs, where my supposed "signature" came from or, more importantly, where the funds are going!" she said.
The auction organisers have now admitted the knickers were never worn by Kylie but were from her lingerie label, Love Kylie.
Kylie has promised to send the successful bidders, one of who spent AU$5,000 on the items, proper signed photographs and said she would reframe items at her own expense.
