An extra 1000 call centre staff will be contracted to help Centrelink answer the more than one million telephone queries from welfare recipients each week.
Human Services Minister Michael Keenan says the extra operators will "help ease the burden on busy phone lines" especially during peak periods when people find it hard to get through.
The new staff will be based in Australia, but will be hired by private companies after a six-month trial of 250 call centre operators employed by Serco.
Labor introduced the model of using private providers at the tax office in 2008, Mr Keenan said.
"There is absolutely no reason why the private sector can't handle these calls," he told ABC radio.
But opposition human services spokeswoman Linda Burney warns the government is merely plugging a hole and it will eventually overflow again.
"Centrelink is absolutely on its knees," she told ABC radio.
"What the government would be better off doing is making the 42 per cent of Centrelink staff who are casualised, permanent."
The minister hopes more people will eventually move online for assistance but says in the meantime the government is boosting its phone service.
"People calling in will notice a far better experience," Mr Keenan said.
