The welfare agency's parent department, Human Services, says it has the right to make public the information when it needs to "correct the record" on inaccurate claims.

The controversy broke out on Sunday after Centrelink provided information to Canberra Times columnist Paul Malone, disputing the claims made by blogger Andie Fox in early February.

In response to the criticism that it had released Ms Fox's confidential information in breach of her privacy, Centrelink said it had the legal right to "correct the record".

"Such disclosures are made for the purposes of the social security law or the family assistance law, they do not need to be formally authorised by the secretary," a DHS spokesman said.

"Unfounded allegations unnecessarily undermine confidence and takes staff effort away from dealing with other claims.

"We will continue to correct the record on such occasions."

The department also stressed that Ms Fox's debt was not related to the "robo-debt" program but was a family tax benefit overpayment.

But Labor Human Services spokeswoman Linda Burney reacted angrily to the disclosure.

"These are deeply unethical actions by the Government," she said.

"The disclosure has occurred deliberately to smear a private individual who has spoken out about the error prone robo-debt program and the deeply flawed Centrelink debt recovery process.

"It is unacceptable for the Turnbull Government to target individual citizens with information leaks in retaliation for their decision to speak out.

"Information held by the Department of Human Services is often sensitive and is provided with the understanding that it is confidential."

Ms Burney said Centrelink was trying to smear Ms Fox in revenge for her public criticism.

"Correcting the record is one thing, attempting to smear and discredit opponents is entirely different and far more troubling," the Labor frontbencher said.