The Prime Minister has commissioned a review of the federal bureaucracy that may lead to its biggest overhaul in more than 40 years.

CSIRO chairman and former Telstra chief executive David Thodey will lead the independent inquiry, which has received broad terms of reference that could let it recommend an entirely new structure and legislation to govern the Australian Public Service.

CSIRO chairman David Thodey, who will lead the review. Credit:Ben Rushton

Malcolm Turnbull and the minister assisting on the public service, Kelly O'Dwyer, on Friday said technological and global public policy changes were "transforming our economy and our society, presenting both opportunities and challenges".

"The public sector has a critical role in this context. Our APS must be apolitical, professional and efficient. It needs to drive policy and implementation, using technology and data to deliver for the Australian community," the ministers said.