The Federal Government is preparing to back down on another controversial aspect of its welfare overhaul, after dumping plans to make jobseekers apply for 40 jobs a month.

The Government announced in the budget a move to force jobseekers under the age of 30 to wait up to six months before they can access unemployment benefits.

But senior government figures have privately conceded the plan is "dead".

Some say the idea will remain Coalition policy, while others would like to kill it off altogether.

Labor, the Greens and the Palmer United Party have declared they will not support the plan, however a spokeswoman for Social Services Minister Kevin Andrews said he was continuing to have negotiations about the proposal.

"The Minister has always said he is happy to discuss alternatives, but at this stage nothing has changed," the spokeswoman said.

Crossbench senators Bob Day and David Leyonhjelm have proposed a one-month compromise deal.

Earlier today, Labor's employment spokesman, Brendan O'Connor, said the Government should reconsider the plan.

"If that were to be enacted, we're going to have young people under the age of 30 deprived of any form of resources, more likely to be homeless, more likely to turn to anti-social behaviour," he said.

"It's bad social policy, it's bad economic policy and it's very hard on those young people who are looking for work."

Greens leader Christine Milne also wants that idea dropped.

"I now want the Government to abandon their six-months-or-nothing routine," she said.

"That is a very bad idea. It is not based on any evidence and it needs to go."

News that the Government will not proceed with the full measure comes as it announced it had abandoned plans to force jobseekers to apply for 40 positions a month.

Employment Services Minister Eric Abetz dropped that plan in favour of the current requirement to apply for 20 jobs a month.

"Whilst we are very strongly of the view that a jobseeker should have as their full-time job gaining employment, we do understand that for business it would be a burden and it might diminish the value of job applications if we have too many applications being undertaken," he told the ABC's AM program.

Mr O'Connor criticised the Government over its "absurd" policy.

"They sought to get a headline in the newspapers with the 40 job applications," Mr O'Connor said.

"[They] didn't think through the implications, didn't think that this would mean 30 million job applications a month when there's not even a couple of hundred thousand jobs on offer."

Tender process for new employment services

But Senator Abetz sought to defend the Government's approach and rejected suggestions its policies were based on a belief that unemployed people did not try hard enough to find work.

"We have a very strong view that it should be the task of every jobseeker to make it their full-time job to gain employment, and that would have been seeking one job every morning and another every afternoon," he told AM.

"So it's not an onerous burden on the jobseeker, but it could lead to less valuable job applications being made especially in certain areas where there aren't as many jobs available, and also it would have been a burden especially on small business."

The Government today launched a tender process for a new $5.1 billion employment services plan and work-for-the-dole scheme to operate from five years from July 1 next year.

Under the work-for-the-dole changes, Senator Abetz said under-30s would be required to do 25 hours per week for six months a year, and those between 30 and 50 would have to work up to 15 hours per week for six months a year.

He has announced that decisions on penalties for not turning up to a job interview would continue to be made by the Department of Human Services.