Unemployed people will be immediately cut off from welfare payments if they do not accept "suitable work", the Federal Government says.

The Coalition wants to toughen the rules for welfare recipients, including through drug tests for Centrelink recipients and a demerit point system for jobseekers.

Payments would be reduced or suspended for those failing to attend job interviews or work-for-the-dole activities.

But Human Services Minister Alan Tudge said payments would be instantly cancelled for four weeks if a reasonable job offer was rejected.

"If you fail to take a job which is suitable for you, then you will have your payment cancelled immediately," Mr Tudge said.

"In that way, again, it's similar to your driver's licence; that if you do a very serious breach, you will have your licence cancelled immediately."

Asked whether an aeronautical engineer would be expected to work in a cafe, Social Services Minister Christian Porter indicated that could happen.

"Whether your training, at first instance, was with that job in mind shouldn't be the determinant as to whether or not that is a good job for you to have," Mr Porter said.

"All jobs are better than being on unemployment benefits.

"This notion that there's a perfect or better or worse job is not one that we accept."

Drug testing program to begin in high-use areas

The Government has not named locations for the two-year drug testing trials, but has said that areas with high illicit substance use will be targeted.

Treasurer Scott Morrison indicated an existing Government program that monitored sewage for traces of drugs would help identify the three pilot sites.

"This is where we'll start the trial …areas where we know that that's the best place to start with a program like this," Mr Morrison told BuzzFeed.

Social Services Minister Christian Porter indicated no additional funding would flow to drug rehabilitation services, saying the Government would look for locations where existing services had capacity.

The measure would only apply to new welfare recipients, and needs to pass Parliament before coming into effect.

People who fail a drug test would be placed onto a Cashless Debit Card, which quarantines income on a card that cannot pay for alcohol, gambling or be used to withdraw cash.