The Federal Government is calling on Labor to support more savings in the budget after it backed down and agreed to scrap $3 billion worth of income tax cuts.

The Government has been trying to abolish the tax cuts for over a year arguing they were unaffordable and unnecessary because they were intended to compensate for the costs associated carbon tax, which is gone.

Shadow treasurer Chris Bowen said Labor had taken the "responsible view" that the tax cuts were no longer appropriate.

"For somebody on around $65,000 a year, it will mean a difference of $1.50 a week. But it is a saving or a boost to the budget bottom line of around $2.8 billion over four years," he told reporters in Sydney.

"Of course, everybody wants to see tax lower rather than higher.

"But given this is the Government's position not to have these tax cuts and given the state of the budget deficit, the responsible thing for Labor to do is to give its support."

It clears the way for legislation to pass in the Senate before the tax cuts were due to kick-in on July 1.

The cuts would have increased the tax-free threshold from $18,200 to $19,400.

Labor's change of heart appeared to not filter through to one of its senators, Deb O'Neill, who attacked the Government on Twitter over the news.

"Oh dear. Another fail. More broken promises from an unfair government attacking families across the nation," Senator O'Neill tweeted.

Finance Minister Mathias Cormann said Labor had "finally come to their senses" and he welcomed the move.

Senator Cormann called on Labor to reconsider its opposition to other budget savings measures that remain stalled in the Senate.

"We call on Bill Shorten and Chris Bowen not to stop here, keep looking at the measures that we've put forward to repair the budget mess that you left behind," he told reporters in Perth.

But Mr Bowen said Labor's position on other measures stands.

"We have considered this matter closely," he said.

"I've indicated the measures we will support, I've indicated the measures we will oppose including the cuts to Family Tax Benefit and I've indicated there are other measures which we are looking closely at like the change to the pension assets test which we are working through closely."