The Australian Broadcasting Corporation (ABC), the country's public service broadcaster, is under sustained attack from Tony Abbott's new conservative government, in a row that echoes Margaret Thatcher's running battles with the BBC during the 1980s.

Allegations made by the ABC last month against the Australian navy about their treatment of asylum seekers prompted a volley of criticism from the prime minister and other senior Liberal National coalition government figures.

The ABC has admitted its initial reporting on the story could have been more precise, although the broadcaster has refused repeated demands to apologise, as the row has extended to questions being asked about its funding and contract to operate an overseas broadcasting service.

It is the second major assault Abbott's government has launched on the ABC since their election in September, following criticism of the broadcaster's collaboration with Guardian Australia on a story that prompted a diplomatic row with Indonesia.

In the latest row Abbott has accused the ABC of taking everyone's side but Australia's and demanded an apology to the navy, just as, in a similar vein, Thatcher's government criticised the BBC's coverage during of the Falklands war and the Troubles in Northern Ireland.

The foreign and defence ministers have also weighed in against the broadcaster, while the communications minister has announced an efficiency review of the ABC's costs – though denying claims by the broadcaster's supporters that it is linked to government anger over its reporting.

The government's previous attack on ABC focused on the broadcaster's partnership with Guardian Australia, which revealed that Australia's intelligence agencies had targeted the mobile phone of Indonesia's president and his wife in November, based on documents from NSA whistleblower Edward Snowden. Following the NSA revelations, Abbott accused the ABC of acting as an advertising amplifier for the Guardian.

In January the ABC's Indonesia correspondent reported claims made by asylum seekers that they had been deliberately burned by the Australian navy. According to the asylum seekers the burns were sustained by being forced to put their hands on a hot pipe, claims denied by the navy.

Abbott responded by claiming that the broadcaster fails to promote Australia's national interest sufficiently. Talking to rightwing radio host Ray Hadley, he said: "It dismays Australians when the national broadcaster appears to take everyone's side but our own and I think it is a problem."

Abbott continued: "Do you believe Australian naval personnel or do you believe people who were attempting to break Australian law?"

Asylum seekers who arrive by boat in Australia are consistently referred to as "illegal maritime arrivals", despite most succeeding in their claims for protection.

There has been internal criticism of the story within the ABC. The broadcaster's own Mediawatch programme said the broadcaster had "overreached" and "got it wrong" by initially appearing to endorse the claims of mistreatment, which the ABC itself subsequently admitted remain unproven.

The ABC issued a statement last week from managing director Mark Scott in which he said it should have been more precise in its initial reporting of the allegations. But Scott said the ABC stood by the thrust of the story and refused Abbott's call for an apology to the Australian navy.

However, the government attacks on the ABC have continued, even as the broadcaster and other Australian news organisations seek to get the bottom of the asylum seekers' claims.

The foreign minister, Julie Bishop, told the Australian the Snowden and navy stories were "counterproductive to our interests" and in another interview questioned whether the ABC's contract to operate overseas news channel the Australia Network was providing value for money. According to the defence minister, David Johnston, the broadcaster had "maliciously maligned" the "heroes" of the navy; the reporting made him "sick to the stomach".

Malcolm Turnbull, the communications minister, last week announced an efficiency review to look into the ABC's current and expected costs, to ensure that the ABC uses public resources as efficiently as possible.

Turnbull has insisted the study will not look at the editorial policies or programming content of the ABC, which is funded by direct grant from the Australian government. He added that the ABC's Australia Network contract was being reconsidered only because its role has been overtaken by technology and not because of the concerns about programme content repeatedly raised by his cabinet colleagues.

He said the review had nothing to do with a highly controversial tender process in which the ABC had competed with Sky News Australia, part-owned by Rupert Murdoch, for the contract. The tender process was strongly criticised by the auditor general and subsequently abandoned when the former Labor government awarded the ABC a 10-year contract.

However, ABC's Mediawatch programme has commented that the criticism over the Snowden and navy mistreatment allegations stories was part of a "bigger picture", with the ABC under constant attack for the past year from commercial rivals including Murdoch, "led by the Australian and columnists in News Corp's tabloids".

"I don't think that there's any doubt that the Abbott government is now seriously seeking to intimidate the ABC," said Tom Morton, director of the Australian Centre for Independent Journalism. "I certainly don't think that either the managing director Mark Scott or the ABC board will be intimidated, but I do think there's a very real prospect there will be substantial funding cuts to the ABC."

Morton, who was also a radio producer at the ABC for many years, said he believed the cuts will be around 10% of the ABC's budget.

There are also concerns the ABC's own reporting will be influenced by the government's concerted criticism.

"If attacks are made on the grounds of bias then reporters self-censor. You will see the ABC not being as robust in its coverage of stories, at least some of the time," said Fiona Martin, a senior lecturer in online media at Sydney University. She said this can already be seen, after the ABC limited its coverage of further claims made about the treatment of the asylum seekers by the Sydney Morning Herald.

But Morton said the attacks on the ABC may fall short of more extreme options flagged, because of the wide support for the broadcaster in rural and regional areas.