As many as 100 subcontractors have been sacked as the federal government's largest department conducts a massive internal fraud probe.

Their contracts were ripped up late last week as allegations of potentially criminal activity inside the Department of Human Services emerged.

As many as 100 employees have been caught up in an internal fraud probe at the Department of Human Services. Credit:Eddie Jim

Many of the subcontractors were supplied by a labour hire company to work on IT projects within the department.

"It appears there are a few 'rogue operators', but because of this breach they had to remove everyone," a source told Fairfax Media.