Minister overseeing the department, Michael Keenan, said on Friday Centrelink had already started targeting 170,000 people no longer on welfare but who had established debts that remained unpaid despite government attempts to contact them.

Social services advocates fear the impact of the new program, saying Human Services had a poor track record of making sure people were aware a debt had accrued against them.

A small amount of the debts have been established through the Coalition's controversial "robo-debt" system, a feature that has added to scepticism over the program.

Australian Council of Social Service chief executive Cassandra Goldie said it feared Centrelink was still getting debts wrong through the automation of its debt calculation process.

"It would be an egregious error of government to also apply interest to debts that are incorrect," she said.

People who don't enter a repayment plan could pay interest of about 8.77 per cent, and the government may involve debt collection agencies and have money removed from the bank accounts and tax returns of former welfare recipients through garnishee orders.

"We believe if you have got money you're not entitled to, you do need to repay it," Mr Keenan said.

"People should be aware that they have these debts, because we've been contacting them about it for some time."

As it tries to claw back $905 million, Centrelink is giving former clients who have received money they're not entitled to 28 days to enter a repayment plan before charging interest.

"As none are currently receiving welfare, the government believes most are now working and have the means to start paying back what they owe," Mr Keenan said.

The debts Centrelink will chase were also established through fraud investigation, self-reporting, and data-matching predating "robo-debt".

Centrelink won't charge interest to current welfare recipients with debts, or a debt under review, Mr Keenan said.

Dr Goldie said under "robo-debt", thousands of people were issued debts to incorrect addresses and the first they heard about their alleged debt was from a private debt collector.

"How will the government ensure that people know that a debt is owing and that interest is being charged?" she said.

"Even where people are made aware of an alleged debt, how will people know what their appeal rights are? Will they be given clear information about what to do if they receive a debt letter? Under robo-debt, thousands of people were issued incorrect debt notices but we suspect many did not appeal the debt."

The Coalition's new debt collection program also made no distinction between debts resulting from administrative error, honest mistakes and fraudulent behaviour, Dr Goldie said.

After Mr Keenan said the debts chased could be 15 years old, Labor's Human Services spokeswoman Linda Burney attacked the plan saying it would require people to hold onto payslips from 2003.

The Coalition government later rejected the claim, arguing it would only pursue established debts, in contrast to its "robo-debt" program aimed at detecting possible debt owed to Centrelink.

Ms Burney said the government wanted to demonise vulnerable Australians who relied on the social security system.

"This government is interested in debt recovery as a means of making claiming income support a scary and difficult process in the hope Australians just give up," she said.

The Human Services "robo-debt" program has kept the department's debt collection efforts under scrutiny after a storm of controversy that saw a Commonwealth Ombudsman report and a Senate inquiry recommend sweeping reforms to its online compliance intervention system.

In April 2017, the Commonwealth Ombudsman found demands "robo-debt" made on former welfare recipients were neither "reasonable" nor "fair", but the Coalition said it vindicated the basic approach of the debt recovery program and that many of the watchdog's recommendations were already in place.