Staff were told on Thursday afternoon that the government was closing their agency and they would be facing redundancy or redeployment in their parent-department, the Australian Taxation Office.

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Parliamentary Secretary to the Treasurer Steven Ciobo is expected to announce the shut-down on Friday and unions say the office’s workers were “shattered” on Thursday afternoon when told the news.

Mr Ciobo would not be drawn on the closure on Thursday evening, saying details would be forthcoming if an announcement was made on Friday.

The job losses will come on top of the 900 public servants the ATO wants to cut this financial year.

The office, which was established in 1910, performs fee-for-service valuations to government departments, with much of its work determining the value of property assets of welfare and pension claimants.

The office had been facing a fall in its revenue streams in recent years as business from the office's major client, the Department of Human Services, which runs Centrelink and the Child Support Agency, dried up and revenue was "lower than forecast".

Australian Valuation Office workers were told in November by their boss, Kath Quigley, that although she hoped to be able to resurrect the income stream from the giant department, they should expect redundancies.

The office managed an after-tax surplus of $800,000 in the 2012-13 financial year from a budget of $34.7 million and was working on securing its future by offering its services to the private sector.

But it is understood that losses were projected at up to $4 million this financial year and big investments were needed in IT infrastructure for it to remain viable. There was also an 80 per cent slump predicted in work from Human Services.

The office’s remaining work is expected to be taken over by private sector valuers.

The closure will affect workers in Canberra, Melbourne and Sydney as well as regional towns including, Young, Bowral, Wagga Wagga, Lismore, Mildura and Port Lincoln.

Most of the office’s valuers work in major tax offices in Collins Street, Melbourne and Parramatta in Sydney, or work from home in rural or regional Australia.

The Australian Services Union’s tax officer’s organiser Jeff Lapidos said the news was shocking to its members working at the Australian Valuation Office.

“They were shattered by the unexpected and shocking news,” Mr Lapidos said.

“The AVO has a proud 100-year existence which has now been crushed by the new government, without any consultation with AVO employees or their unions.

“The Australian Services Union is disgusted that the government would make this decision.

“It is short-sighted, disregards the AVO’s long history and suggests the Government intends making further, savage cuts to the Australian Public Service and to the funding of the non-government community sector.”