Centrelink still failing in its customer service obligations.

The Ombudsman has made 12 recommendations to fix problems at Centrelink. Photo: Supplied

Centrelink is still failing in its customer service obligations despite years of warnings from the federal government's complaints watchdog.

In his latest report into the welfare agency's performance, the Commonwealth Ombudsman criticised Centrelink for cutting off payments to a disability pensioner and sending him a bill for $95,000 while he was living in a caravan after his house burnt down.

The matter was one of 40 case studies chosen by Ombudsman Colin Neave to illustrate the problems that led 9600 Centrelink customers to complain to his office between January 2012 and September 2013.

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Relations between the Ombudsman's office and Centrelink's parent department, Human Services, have been prickly for several years and came to a head in late 2012 when Mr Neave said his office was struggling to cope with the deluge of complaints about Centrelink.

In his report, published on Tuesday, the Ombudsman has made 12 recommendations to fix the problems at Centrelink, which were all accepted or partially accepted by the Department of Human Services.

But DHS secretary Kathryn Campbell reacted coolly to the findings, suggesting the problems with Centrelink had been overstated and questioned the Ombudsman's methodology.

Mr Neave said the report was sparked by complaints from people unhappy with Centrelink's service and accused it of withholding the phone number of dedicated complaint lines. "While I acknowledge the majority of Centrelink services are delivered without cause for complaint by customers, we continue to receive a steady stream of complaints about the agency," he said.

''And while admittedly few in comparison to Centrelink's total number of interactions with its customers, the number and nature of complaints suggest a gap between the agency's commitment to service delivery and the reality experienced by some customers."

Mr Neave found that most of Centrelink's problems were related to a failure to communicate, with clients waiting too long to have their phone calls answered, failing to speak to officials face-to-face, website outages and confusing letters.

"People had difficulty finding information about payment qualifications," he said. ''They had trouble making a claim because of a lack of accurate information. They could not understand Centrelink's correspondence which they said was sometimes confusing and contradictory."

There were also problems with Centrelink's internal review system, with the backlog blowing out to more than 25,000 in March 2013, but is understood to have improved by 25 per cent in the past 12 months.

In her response to the report, Ms Campbell noted that more than 250 million transactions were undertaken by Centrelink between January and September 2013, and only .004 per cent resulted in complaints.

"The department considers the report could better acknowledge the considerable reforms that have been implemented as part of the Service Delivery Reform Agenda and the very small number of complaints that are made about Centrelink program service as a percentage of customer transaction," she wrote to Mr Neave.

She was also unhappy that 40 case studies were cited in the report.

"However only 21 of these complaints were investigated by your office," she wrote.

"The department queries the value of the report focusing on complaints which were not investigated and therefore not verified by your office."