Commonwealth departments and agencies have been ordered to terminate the jobs of all contract workers when their terms expire, in a bid to meet the Coalition's target of reducing the public service by 12,000 jobs.

The Public Service Commission issued the guidance to all public sector heads, outlining a new process for employing staff, effective immediately, including careful analysis of whether a role needs to be filled at all.

The directive says all "non-ongoing" positions must stop at the end of their current term, affecting about 1,400 positions across the public service.

Nadine Flood from the public sector union has accused the Government of being dishonest with voters in the lead-up to the election, saying axing non-permanent staff is not the same as shedding staff by natural attrition.

"This is a tough decision today. The Coalition tried to hose down these job cuts during the election saying effectively no-one will get sacked, people will leave and not get replaced," she said.

"What we are seeing today is potentially thousands of staff on contracts will lose their jobs before Christmas."

The Public Service Commission's move comes on top of a hiring freeze imposed by Workplace Minister Eric Abetz last week.

The nation's peak science and research body, the CSIRO, is expected to be one of the worst affected by the hiring freeze because of the number of casual and contract workers it employs.

Its deputy chief executive, Craig Roy, says hundreds staff have contracts that expire at the end of the year.

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"We have people who are on term contracts; around 300 of those would come up for normal review at the end of the fiscal year," he said.

"Some of those will go on, others won't go on.

"The other important step we've taken here is that every role that does come up - we will have new roles come up from time to time as we do new pieces of work with industry or community - we will look very closely internally before we go to the external market to understand is there anyone internal who can potentially be redeployed into a different role to do that particular piece of work."

Mr Roy says the CSIRO employs more than 6,000 permanent staff but he would not say how many would lose their jobs.

Assistant Treasurer denies cuts will affect CSIRO's work

Assistant Treasurer Arthur Sinodinos suggested 500 to 600 positions would go, but he has denied it will affect the agency's work.

"This is a situation where the CSIRO will be speaking to people in the organisation about how this reduction can be achieved and will ensure it's not compromising its core responsibilities and flagship programs," he said.

Mr Roy has backed Senator Sinodinos, saying his agency's most important work will not be affected by the hiring freeze.

"Where we've got a commitment to a stakeholder to deliver some science in partnership with them, be that industry, be it community, be it one of the government departments, we will deliver on that commitment," he said.

"We will find a way to do it - whether it is either redeploying people internally or whether it's hiring new people externally."

Greens MP Adam Bandt says he is gravely concerned about the number of positions that will go at the CSIRO and says it highlights the problem with not having a dedicated minister for science.

"We know the Prime Minister doesn't place much stock in science, and particularly climate science," he said.

"There needs to be a champion for science within the Government, and not only have they failed to appoint a science minister, they seem to be going out of their way to dismantle the country's scientific capacity."