Health's public servants learnt of the overhaul on Thursday afternoon as the department starts to transfer hundreds of staff over several years into Social Services, which will take over its grants administration work.

Among staff leaving Health in the latest shake-up, the department has identified 55 positions it won't need after the restructure.

Department first assistant secretary Donna Moody told employees that redundancies would be forced on staff that Health could not redeploy.

It plans to move grants administration into the new community grants hub run by Social Services, forcing a restructure in its Canberra division where positions will be declared vacant and staff will be asked to send expressions of interest for available roles.

"This process will be run over the next month or so with the expectation that it will be finalised by mid-December and that the new structure will commence in mid-January," Ms Moody said.

"As of today there is an opportunity for voluntary redundancies for all staff who are in scope for the EOI process. Staff not placed in the new structure will be supported to find redeployment opportunities, however involuntary redundancy processes will apply for those who are not able to be redeployed."

Staff reductions in the Health department's state and territory network are expected to be made through natural attrition.

The latest round of job cuts comes towards the end of a volatile year for the department, which announced it was shedding 250 staff through voluntary redundancies in February, parted ways with former secretary Martin Bowles in August and subsequently welcomed new boss Glenys Beauchamp.

A Health department spokeswoman said under reforms to improve grants administration across the Australian Public Service, the Department of Social Services was one of two hubs consolidating the grant process across government.

"The department has reassured staff that there will be open and fair processes and staff will be fully supported," she said.

Community and Public Sector Union deputy secretary Beth Vincent-Pietsch said Health had told the union most if not all of the positions would be cut through voluntary redundancy and redeployment in its bid to overhaul how funding for health services was administered and monitored.

She said the second round of major job cuts in Health was compromising its work and said the Turnbull government was attacking the public service.

"Health is one of numerous agencies that's no longer provided with enough funding to properly do the work expected of it by the Australian public. Budgets have been cut to the point where there's no choice but to cut jobs, inevitably hurting the core functions and services agencies provide," Ms Vincent-Pietsch said.

"Health staff understand the theoretical benefits of a restructured grants process, but they have well-founded concerns that years of reviews and 'streamlining' have in fact resulted in less efficiency and ineffective management of risk."

Ms Moody told employees Health was talking with the Social Services department about how it would move grants administration there, and said no formal agreement had been made.

Health's national office in Canberra would shrink from three branches to two and from 13 sections to seven, reducing jobs from 145 to about 90.

State managers will review their divisions and make adjustments, Ms Moody said.

"The state and territory offices will also need to continue contributing to the division's required reduction in resources to ensure we live within our means."

Mr Bowles told staff early this year the department was cutting jobs in a bid for "affordable" staff numbers amid federal budgetary constraints.

The announcement came after he flagged last year that budget and staffing issues would be the department's largest challenges in 2017.