The government department that runs Centrelink has backed a decision to deny disability payments to a man who lost his leg in a shark attack, saying he should complete rehabilitation and get a prosthesis fitted before being considered.

Cairns spearfisherman Glenn Dickson had his leg amputated in February after he was bitten by a bull shark near Hinchinbrook Island, but was knocked back from receiving disability support because his impairment was not deemed severe enough.

"The shark hit my leg like a chainsaw," Mr Dickson said.

"It swallowed my whole leg and had chomped and shredded all around my upper thigh, completely to the bone."

He has spent the last three months recovering and applied to Centrelink for the disability support pension (DSP).

Mr Dickson said he could not currently work in his occupation as a boilermaker and his family was experiencing financial uncertainty as they approached the birth of their third child.

"It's a lot harder for my partner. She now has to look after me," Mr Dickson said.

Department tells man to get rehab, prosthetic leg

In a statement, Department of Human Services general manager Hank Jongen said the department had reviewed its decision to reject Mr Dickson's application.

"The department can confirm a review has shown this matter was handled appropriately and in accordance with legislation," he said.

Glenn Dickson with partner Jessie-Lee months before the shark attack. ( Supplied: Glenn Dickson )

Mr Jongen said eligibility for the DSP was "not based on the diagnosis of a condition or amputation alone" and medical conditions must be "fully diagnosed, treated and stabilised" before the department's health professionals can make an assessment.

He added that a person needed to prove that treatment would not result in significant functional improvement within two years.

"For people who have had an amputation, it is reasonable to expect that having a prosthesis fitted and participating in rehabilitation will result in significant functional improvements in the next two years, and those improvements will allow them to undertake some kind of work," he said.

A Centrelink letter sent to Mr Dickson last month said he was deemed ineligible for the pension because he did not have "an impairment rating of 20 points or more".

"In making this decision we took into account all available medical evidence and other relevant information about your circumstances," the letter stated.

Mr Dickson said he was receiving Newstart — the welfare payment for jobseekers — however he would prefer to be on the higher payment DSP.

"When you lose your leg, you'll think you're just going to get it, that's a disability," he said.

Mr Dickson may be eligible for sickness allowance, another welfare payment for people who temporarily cannot work or study because of an injury, illness or disability.

Centrelink becoming 'increasingly punitive', MP says

Cairns MP Rob Pyne is a quadriplegic and a strong advocate for people with disabilities.

Cairns MP Rob Pyne says Mr Dickson's case is an example of why law changes are needed. ( ABC News: Kristy Sexton-McGrath )

He believes Centrelink is becoming "increasingly punitive" in its approach to approving welfare payments for people with disabilities.

"I've sat with the mum of a young lad who had a stroke and been non-verbal and not even able to communicate," he said.

"Yet [he was] denied the disability support pension because the doctors wouldn't sign something to say he'd never recover."

Shark attack victim 'not looking for handout'

Mr Dickson said he was only looking for welfare support while he recuperated.

"We're not looking to get a disability pension for when I'm able to work again. We're just looking for help whilst I'm trying to get there," he said.

"This makes no real sense to the average Australian. I don't want a handout. I just want to get to the next point."

Mr Dickson said he had post-traumatic stress disorder (PTSD) but was incredibly thankful to be alive with his family.

"I'm not going to let this tragic incident change my life to the effect I don't want to get back into the ocean," he said.

And despite everything, he does not support a shark cull.

"I was fully aware of what I was doing and knew the risks of getting in the water," he said.

"It was just very unfortunate that it happened to me."