Crossbench senator Nick Xenophon has suggested he will support the Federal Government's plan to drug test new welfare recipients, potentially giving the Coalition the numbers in the Senate.

Key points: Nick Xenophon says Australia has a "serious drug problem"

Nick Xenophon says Australia has a "serious drug problem" The senator's support would likely give the Coalition the numbers to pass the plan in the Senate

The senator's support would likely give the Coalition the numbers to pass the plan in the Senate Labor and the Greens oppose the plan

The South Australian senator — who controls a crucial bloc of three votes — said Australia had a serious substance abuse problem and he wanted to work "constructively with the Government on lifting people up and away from drug addiction".

"It's clear there are many people in this country who are struggling with their addictions and, as a result, have serious problems including not being able to get into the workforce," he said.

The plan to drug test 5,000 new jobseekers across three separate locations will begin in January, subject to Senate approval.

Nick Xenophon says he wants to help lift "people up and away from drug addiction". ( ABC News: Jed Cooper )

The Government has chosen the Canterbury-Bankstown council in western Sydney as the first trial site, due to the high number of job seekers in the area applying for welfare payments and a rise in methamphetamine-related hospital admissions.

Those who initially test positive to cannabis, ice or ecstasy will have 80 per cent of their welfare payment quarantined onto a "Basics Cards", which can only be used for certain purchases, such as rent, child care and food.

A second positive test would see the welfare recipient charged for the cost of the test, and referred for treatment.

Treatment, not punishment for drug users: Porter

Prominent drug and alcohol experts and charities, including Anglicare Australia, have spoken out against the trial, saying the drug tests would place enormous stress on welfare recipients and would not reduce addiction.

But Social Services Minister Christian Porter said the trial, "isn't designed to stigmatise or punish or penalise anyone" and was instead aimed at breaking the cycle of abuse and welfare dependency and helping get people into work.

"That's why welfare is not cut off because of a positive test," he said.

"Rather, welfare is managed if there is a positive test in a way that limits the amount of cash available and, on a second positive test, we will engage in every endeavour to get that person the treatment they need."

Labor and the Greens firmly oppose the plan, meaning the Government will need to convince the Nick Xenophon Team, One Nation and three other crossbenchers to pass the necessary legislation.

Senator Xenophon said he was broadly supportive of the trial but did not think job seekers should be subjected to income management after one positive drug test.

"There are some concerns about what the Government has put out there in terms of a design," he said.

"I would have thought that counselling, rehabilitation and active intervention would be more helpful."

Shadow attorney-general Mark Dreyfus said Labor refused to support the trial because there was no evidence to suggest it would reduce drug addiction.

"On the contrary, it's likely to lead to an increase in crime, an increase in poverty and further harsh treatment of welfare recipients," he said.

Greens senator Rachel Siewert echoed those concerns and said overseas experience had shown such trials were both costly and ineffective.

"Consistent advice from drug and alcohol experts have rejected the approach," she said.