More than 800 workers are being stood down from the $USD36 billion Inpex-led Ichthys gas project in Darwin.

Key points: Redundancies due to contractual dispute between Laing O'Rourke and Kawasaki

Redundancies due to contractual dispute between Laing O'Rourke and Kawasaki Union says Kawasaki owes Laing O'Rourke about $200 million

Union says Kawasaki owes Laing O'Rourke about $200 million CFMEU says layoffs took workers by surprise

The head contractor JKC Australia LNG confirmed 640 direct employees had been stood down from the project, worth $AUD47 billion, and Laing O'Rourke said a further 200 subcontractors were also affected.

Laing O'Rourke has the contract to build cryogenic tanks at the Inpex site on behalf of Kawasaki Heavy Industries, one of the largest contracts on the project.

The Ichthys project will take natural gas off the coast of Western Australia and pipe it 900km underwater to a processing plant in Darwin Harbour.

A contractual dispute between Kawasaki Heavy Industries and Laing O'Rourke is at the centre of the lay-offs.

Laing O'Rourke confirmed it had withdrawn over the dispute.

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Construction, Forestry, Mining and Energy Union (CFMEU) spokesman Josh Burling told the ABC the lay-offs had taken workers by surprise.

"Laing O'Rourke has shipped everyone off-site on the buses, and they will be getting demobbed today from Darwin on planes and sent home to be redundant and without a job," he said.

He told the ABC he received a phone call early this morning from a Laing O'Rourke representative confirming the lay-offs.

Mr Burling said he had been told workers were beginning to clear out of the workers' camp at Howard Springs, and that Laing O'Rourke had chartered a flight to Brisbane this afternoon to move as many workers as possible off-site.

Employees 'shocked' when told as they got off bus

Inpex workers say they only found out when they showed up to work this morning. ( ABC News: Nadia Daly )

As workers arrived at Darwin International Airport they said they were "shocked" by the decision and that they had been told the news when they got off the bus to go to work this morning.

"Overnight, bang, gone," one worker said.

"No one saw it coming," said another worker.

Laing O'Rourke worker Brett Woodley said there had been rumours about the job losses for weeks.

"Yesterday afternoon some of the guys were told to go through the containers and get their personal tools and that out and keep them with them," Mr Woodley said.

"They said they were doing an inventory on all the company tools and electrical gear and all that, sort of thought — well hang on, something's going on here.

"And then this morning they just said, 'well, that's it'."

Workers have become 'cannon fodder': Shorten

Opposition Leader Bill Shorten criticised the lay-offs, saying workers had "done nothing wrong".

"There is a dispute between the construction contractor and the client, and all of a sudden these thousand workers are the cannon fodder in a legal battle between two employers," Mr Shorten said.

"I think it is a pretty sad state of affairs when a thousand blue-collar tradies get sent home from Darwin and sent interstate because one company cannot sort out a contractual dispute with another company.

"It is not fair."

Inpex said in a statement the matter was between contractors working for JKC.

"Inpex does not comment on commercial matters with JKC or its contractors," it said.

'No dispute' with Kawasaki or Laing O'Rourke: JKC

Contractor JKC said it remained committed to delivering on the Ichthys project. ( Supplied: Inpex )

JKC said it expected the dispute to be resolved and the works to continue.

"JKC is not in dispute with the Kawasaki Heavy Industries and Laing O'Rourke Consortium, and the subcontract for this scope of work remains in place," JKC's statement said.

"The engineering, procurement and construction of the cryogenic tanks is approximately 91 per cent complete, and JKC remains committed to delivering this scope of work and the overall Ichthys Project Onshore LNG Facilities."

But in a statement Laing O'Rourke said Kawasaki Heavy Industries had not paid it for its work on the project for "several months".

"Laing O'Rourke has made significant efforts to resolve the matter," it said in the statement.

"But direct approaches to KHI in Japan over recent weeks have failed to produce a satisfactory outcome."

Laing O'Rourke also said they told the Kawasaki it would take action "unless urgent measures to rectify the situation occurred".

The company confirmed all employees have been paid and have received their entitlements during the period of dispute.

It also said another project it runs on the Ichthys site, which is directly for JKC, is unaffected.

The Northern Territory Government also released a statement saying other large-scale construction projects in the future would provide employment opportunities for former Inpex workers.