HTC posted a statement on its website on Sunday confirming there was a problem. "The software for this feature is set up incorrectly. The device's GPS hardware is not affected and will operate once a minor software update is made."
The update is currently being developed to fix the glitch, which Telstra said in a statement was likely to be released this week.
"Obviously we're disappointed that this feature was unavailable to customers from launch. We apologise for any inconvenience or frustration this may have caused," the statement said.
Telstra released the HTC Desire on 21 April and holds exclusive rights in Australia for the next six months. Plans start at $60 for consumers or $65 for businesses, with a Next-G bolt-on needed for internet access.