US President Donald Trump has dismissed reports of a heated phone call with Prime Minister Malcolm Turnbull as “fake news”, declaring that the two leaders have a “great relationship” as they met in New York on Friday.

“You guys exaggerated that call,” Mr Trump told reporters during a brief photo opportunity on Friday.

“That was a big exaggeration. We had a great call. I mean, we’re not babies. But we had a great call. Right?”

Mr Turnbull responded: “Exactly right.”

But in a speech later in the day, the President conceded the call had “got a little bit testy”.

The President had kept Mr Turnbull waiting for more three hours as the Congress mulled a crucial vote on his healthcare plan, but the pair eventually met for 30 minutes before briefly fronting the cameras.

The Prime Minister’s visit to New York comes days out from the Australian federal budget and as tensions boil on the Korean peninsula.

The PM was joined by his wife Lucy as he met the President. Photo: AP

Although the two leaders were expected to discuss foreign policy issues, such as the threat of North Korea, in their meeting, Mr Trump was focused on his healthcare plan when the pair addressed the media.

Celebrating the passage of the legislation repealing Obamacare through the Congress, the President surprised observers by complimenting Australia’s healthcare system.

“I shouldn’t say this to our great gentleman and my friend from Australia, because you have better healthcare than we do,” the President said.

“But we are going to have great healthcare very soon.”

Domestic opponents seized on the comments, pointing out that Obamacare, which combines government subsidies for private health insurance companies with an expansion of the US’s own Medicare program, bears many similarities with the Australian system.

“Thank you, Mr President. We’ll quote you on the floor of the Senate,” Senator Bernie Sanders, a staunch opponent of the Obamacare repeal, told the cable network MSNBC.

Trump: Australia has better health care than U.S. (they have universal health care)

Watch the reaction from @BernieSanders to @chrislhayes pic.twitter.com/zYF8NsGKF0

— Bradd Jaffy (@BraddJaffy) May 5, 2017

Health care furore

Mr Turnbull also courted controversy after congratulating the President over the passage of a bill to repeal former President Barack Obama’s healthcare policy.

“It is always good to win a vote in the Congress, or the Parliament as we call it,” Mr Turnbull said.

“And I’ve got to say, it is always reasonably satisfying to win a vote when people predict you’re not going to win it too. So keep at it. It is great. Well done Mr President.”

The bill, which must still pass the Senate, would allow insurers to deny coverage to those with pre-existing conditions, among other changes, meaning millions will lose their insurance, critics say.

Labor’s health spokeswoman Catherine King said the Prime Minister had praised a bill that “could see 24 million people lose their health cover”.

Joined by their wives, Melania and Lucy, Mr Trump and Mr Turnbull both spoke at the dinner to commemorate the 75th anniversary of the Battle of the Coral Sea.

The President, introduced by News Corp boss Rupert Murdoch, said the two nations were “rebellious children of the same parent”.

Mr Turnbull told the dinner he and Mr Trump had discussed “the bond our great nations forged in freedom’s cause”.

Earlier, Australian officials had sought to play down speculation that the President had “snubbed” his Australian counterpart by postponing their meeting.

Opposition Leader Bill Shorten said he “didn’t like the look of our Prime Minister being kept waiting for three hours”.