RENT, bills and food are in but alcohol, cigarettes and gambling are out.

A federal government trial in which Centrelink manages the money of welfare recipients began yesterday amid an angry protest.

Bankstown, in Sydney's southwest, is one of five areas where the trial is being conducted.

It is designed to help allocate Centrelink benefits so that expenses are paid.

Under the government's Stronger Futures legislation, the trials will direct money from some welfare recipients to pay for "priority items" such as food, housing, clothing and utilities.

The remainder of the money can be used as they wish - but with strict exclusions.

Recipients are forbidden to spend their welfare on alcohol, tobacco, pornography and gambling.

Those who take part in the scheme may also be given a BasicsCard, which allows them to shop at Centrelink-approved stores, including Coles and Woolworths in some places.

The BasicsCard is a PIN-operated Eftpos card which can be used to buy most goods and services at the registered stores.

The scheme is voluntary, but it can be made compulsory for people who are falling behind in rent and bill payments or because of child protection issues.

Volunteers are eligible for an incentive payment of $250 for every 26 consecutive weeks they stay on the program, which covers those receiving benefits including Newstart and the pension.

Centrelink social workers will decide on the compulsory income-managed cases.

A vocal group of Bankstown protesters reacted angrily to the start of yesterday's trial.

The Say No to Government Income Management coalition claims there is no evidence that income management works.

But the government said the trial was based on the West Australian model, which has been successfully running since 2008.

Coalition spokeswoman Pam Batkin said the trial could result in people having up to 70 per cent of their welfare payments quarantined through a BasicsCard.

"It is bad social policy because it further stigmatises and marginalises people who are really struggling," Ms Batkin said.

Arab Council Australia chief executive Randa Kattan said she was appalled by the legislation, which she said discriminated against vulnerable welfare recipients.

The coalition members plan to boycott the trial, with support workers refusing to refer people on to the system.

Bankstown resident Carol Carter said the legislation did not allow welfare recipients to have a say in where they shopped or what they bought.

The other trial locations are Logan and Rockhampton in Queensland, Playford in South Australia and Greater Shepparton in Victoria.

Originally published as Welfare ban on booze, tobacco