Centrelink's automated debt-recovery program is likely to face a Senate inquiry, with Labor vowing to move a motion when Parliament returns next month.

Key points: Labor's Linda Burney says an inquiry is needed to reveal what went wrong

Labor's Linda Burney says an inquiry is needed to reveal what went wrong Nick Xenophon pledges in-principle support for inquiry

Nick Xenophon pledges in-principle support for inquiry Public would be able to make their own submissions

The Greens have already called for the program's architects to face an inquiry and South Australian senator Nick Xenophon, who controls three votes in the Upper House, has been highly critical of the program.

The program — which matches Centrelink and Australian Tax Office (ATO) records — has issued nearly 170,000 notifications since July, with thousands of Australians incorrectly told they owe money.

In some cases, welfare recipients have been forced to start repaying fortnight instalments to Centrelink despite continuing to contest their records.

The Commonwealth Ombudsman has launched an investigation into the debt-recovery program after a referral from Mr Xenophon, who said he had been inundated with complaints from his constituents.

The program was automated in mid-2016 after a pilot program confirmed savings could be made.

Opposition spokeswoman for human services Linda Burney said the program was "a disaster" and needed further investigation.

"We need an inquiry to get to the bottom of how the Government got this so wrong, how people have been impacted and what can be done to fix this mess," she said.

"Government ministers can't be allowed to keep saying the system is working fine. It clearly isn't. It's a total debacle."

Prime Minister Malcolm Turnbull defended the program on Wednesday describing it as "entirely responsible and appropriate".

"Centrelink has a responsibility where it identifies the discrepancy between what the recipient has reported and what the employer has reported to seek an explanation, and that is what is being done," he said.

Members of the public can make submissions to inquiry

Senator Xenophon told the ABC he had not seen the terms of reference for the inquiry, but gave his in-principle support provided it would focus on preventative measures.

A Senate inquiry would enable members of the public to make their own submissions, detailing their experiences with Centrelink and debt collectors.

Greens senator Rachel Siewart said earlier this month she would work with colleagues to establish an inquiry once Parliament resumed.

"We need clear answers on how this program went so wrong and what the real implications are," she said.

Human Services Minister Alan Tudge has insisted the data-matching program was working and would continue, but made several changes earlier this week.

Department of Human Services general manager Hank Jongen has also defended the program, saying welfare recipients have an obligation to ensure their records are up to date.

Both men have rejected claims that automated notifications issued by Centrelink are "debt letters", saying clients have an opportunity to clarify any discrepancies.

Kristin Carao, a recent Monash University graduate, told the ABC she had been notified of a $6,800 debt, with Centrelink records incorrectly noting she had not been a full-time student.

"The customer service representative that I talked to admitted that they do have this evidence but that I still needed to make payments even though I had launched an appeal, and that it would most likely be successful," she said.

"I feel this is unfair and unconscionable as I have done nothing wrong and I have not tried to defraud them at any point."

Data-matching program to be expanded

The ABC confirmed on Tuesday the Government's plan to extend the debt-recovery program to focus on aged pensioners and disability support payments later this year.

Parliamentary Budget Office charts show the plan to use a data-matching program to save nearly $1.5 billion over four years.

But the program will based on assets and investments, rather than income data.

Mr Tudge has now told his department to ensure welfare recipients can launch an internal review of their payments before debt proceedings are launched.

Language used by the Government agency will be simplified and contact phone numbers will be issued on notifications, rather than online.

Letters will now be sent through registered mail so Centrelink can track whether they have been received.

In some cases the letter will be followed up with a phone call.