The appointment of Stephen Sedgwick, who headed two of the bureaucracy’s most important portfolios - Finance and Education - between 1992 and 2002, suggests the Government is about to give the commissioner far broader powers over the Commonwealth’s 162,000 public servants.

Mr Sedgwick left the public service in 2002 after more than 30 years in the bureaucracy. He later headed the Melbourne Institute of Applied Economic and Social Research and was on the board of the Asian Development Bank.

He also served as former prime minister Bob Hawke’s chief economic adviser in the 1980s.

The public service commissioner guides the recruitment of senior executives and is responsible for ensuring that public servants act ethically.

The appointment of the veteran Mr Sedgwick contrasts with the most recent commissioner, Lynelle Briggs, who was relatively inexperienced when she was appointed in 2004.

Public service sources described the news as a surprising coup for the Government, given several current departmental secretaries had reportedly refused to accept the job. One insider said Mr Sedgwick would be an authoritative leader "who has nothing to lose".

The Government's public service review, due to report early next year, is widely expected to recommend stronger powers for the Public Service Commission, including more control over the bureaucracy's industrial relations policies and wage agreements.

The acting commissioner, Carmel McGregor, who is one of the review's advisers, told The Canberra Times last month the commission should play a more prominent role in managing the public service workforce, particularly training and recruitment.

Prime Minister Kevin Rudd highlighted Mr Sedgwick’s broad experience today, saying he would play "a key role in the process of the review and reform of the Australian Public Service which the Government is undertaking to ensure that it is well placed to meet the challenges of the 21st century ".