The federal government says Centrelink's controversial new automated debt recovery methods are working "incredibly well" and only attracting a tiny number of complaints, while recovering about $300 million in taxpayer funds since July.

Low-income Australians have reported receiving letters of demand for thousands in recalculated welfare debts in the Christmas and New Year period as the agency's new compliance system data matches income information with other government records, including at the Australian Taxation Office.

Labor, Independent MP Andrew Wilkie and social service organisations have called on the government to halt or close the system, which tells Centrelink clients to repay debts where discrepancies between entitlements and money paid out over recent years are identified.

On Tuesday, Social Services Minister Christian Porter defended the system and said of 169,000 review letters sent since July, only 0.16 per cent had resulted in complaints.