It's understood that anywhere between 170 and 300 contractors, working on various information technology contracts across the department, were told this week that they were no longer required, with their work to be finishing up in the next few weeks.

While contractors are not guaranteed ongoing work in the same way as public servants employed directly by the government, the nature of government IT contracting means that a high number of IT workers are on rolling contracts with a high degree of stability.

Home Affairs would not confirm the exact number of contractors told they were no longer needed, but industry sources believe it to be around 200, although other figures have also been mentioned.

The department did confirm the changes were related to budget savings, but did not say how much would be saved.

"Measures to ensure budget resources are applied to priority outcomes include ensuring that travel and recruitment are within budget parameters as well as reducing duplication and reassessing project effort," a department spokeswoman said.

"Some projects have been assessed as lower priority and this will see some projects pause, slow down or cease."

The spokeswoman confirmed the current actions don't include cuts to public servant jobs, and said that the department regularly reviews its operations to ensure resources are going to priority projects.

There are concerns in the industry for the high number of people who now find themselves without work before Christmas, as well as the flow-on effects for the sector in Canberra, which is likely to face more supply than demand, which could lead to rates across the board being forced down.

It's believed the contractors were told of the decision by recruitment companies that place them in the departments, but recruiters in Canberra weren't in a position to comment on Friday.

Head of Professionals Australia's ACT branch and Australian Government Group Dale Beasley labelled the news troubling.

"Which ever way you cut it this is a massive blow. These professionals will be out of work weeks before Christmas," Mr Beasley said.

"To have a large number of professionals looking for new work all at the same time is going to present significant challenges, and the ACT will likely lose many to interstate employers. It’s bonkers to treat IT professionals, key enablers to so much of what our departments and agencies do, like this."

Mr Beasley acknowledged that contractors take risks when choosing that form of employment, but said cutting swathes of contractors was symptomatic of bigger problems in the public service.

"We know that contract work in the APS can seem like a lucrative option, but at the end of the day the nature of contract work is that it’s uncertain and insecure. You’re an integral asset one day, and disposable the next. As the union for IT and technical professionals, we’re calling on government to do more," he said.

"The APS is losing internal skills, capacity and technical integrity, and ends up paying a premium to rely on the private sector to provide it. That’s not to diminish the important role of industry, there are numerous good reasons for departments and STEM leaders in industry to collaborate. However, the balance must be struck to ensure that Australia retains its own, sovereign STEM expertise."