The Turnbull government is resisting mounting calls to shelve Centrelink's deeply flawed debt recovery program.

The automated system has produced 170,000 notices of potential overpayments with thousands of people incorrectly told they have outstanding debts, some running into the tens of thousands of dollars.

The Commonwealth Ombudsman is investigating what many are calling a fiasco and a parliamentary inquiry is also likely.

Labor's Linda Burney says Centrelink is at breaking point and that the Human Services Minister Alan Tudge must suspend the scheme without delay.

But the Minister has made no admission of any flaw in the Centrelink automated debt system.

'The system is working and we will continue with that system', he says.

'I'm not aware of individuals who are completely convinced that they don't owe money but have been given a debt notice'.

'People are given the opportunity to update their records when a discrepancy is found to be present. When a debt notice is issued to them, if indeed it is, they have a further opportunity to provide further information. And then they have a third opportunity again if they want to appeal it to the tribunal', he says.