Centrelink's controversial debt-recovery program will be investigated by a Senate committee to determine why thousands of Australians were incorrectly told they needed to repay money.

Key points: Centrelink's debt-recovery system was automated in 2016

Centrelink's debt-recovery system was automated in 2016 Greens Senator Rachel Siewert called program "a monumental mess"

Greens Senator Rachel Siewert called program "a monumental mess" Bill Shorten called on Human Services Minister to apologise during Question Time

The Department of Human Services has cross-referenced Australian Tax Office and Centrelink data to determine overpayments for years, but the system was automated in mid-2016 to save money.

With human oversight greatly reduced, some Australians were contacted by debt collectors before they realised they needed to correct their records.

The Senate inquiry was moved by Greens Senator Rachel Siewert and passed with the support of Labor and the Nick Xenophon team.

Senator Siewert said the program was a "monumental mess" and accused the Government of not providing answers or a guarantee they would improve the program.

"The automated debt-recovery system, which started trying to collect debts without human oversight, has caused anguish for thousands of Australians, many of which do not even have a debt at all," she said.

"These people are now having to rake through records from years ago to prove they don't have debts — they need and deserve answers.

"It is clear that the automated debt-recovery system must be investigated by a Senate inquiry so we can drill down and begin providing answers to the community that the Government won't."

Labor attacked the Government during Question Time on Wednesday, asking why a 67-year-old pensioner was erroneously told she owed the Government money.

Opposition Leader Bill Shorten said Human Services Minister Alan Tudge should have stood up in Question Time to say "I'm sorry, we made a mistake".

Coalition Ministers have continued to defend the program, claiming welfare should only be given to those who are entitled to it.

Bill Shorten said Human Services Minister Alan Tudge should have apologised during Question Time. ( ABC News: Nick Haggarty )

The Government introduced changes to the program last month, despite insisting it was working and dismissing calls for its suspension.

Labor's human services spokeswoman Linda Burney said last month the program was a disaster and further investigation was needed.

"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.

The Senate inquiry has been welcomed by the main public sector union, the Community and Public Sector Union (CPSU), which is preparing to launch strike action over the program next week.

"Our members working in Centrelink are looking forward to this inquiry so they can shine a light on what's caused this shameful crisis and what should be done from here," CPSU national secretary Nadine Flood said.

A cost-benefit analysis of the debt-recovery program found more than 860,000 clients had discrepancies in their accounts between 2010 and 2013.

The debt-recovery program had human oversight during these years but more than 1 million discrepancies were found, with an average debt value of $1,400 per person.