A Senate inquiry has recommended an overhaul of current provisions that force welfare recipients to pay back debts accumulated because of an error by Centrelink.
For Centrelink to consider waiving a debt welfare recipients need to prove the overpayment was "solely" the fault of the agency.
The Senate review of government compensation payments said waivers should be permitted in cases where the Centrelink error was the main contributor to the debt.
It also suggested allowances be made for women who have been pressured by an abusive partner to claim a social security payment as a single person.
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The National Welfare Rights Network says the current system is harsh and encourages complacency.
"Centrelink can make a multitude of errors in assessing a person's entitlement (and) accept no responsibility for it errors," network president Maree O'Halloran said, adding that encouraged the agency to be less efficient than it should be.
"We urge the government to grasp this historic opportunity to right a wrong and to provide relief for damaged individuals and families."
More than two million overpayments, worth $1.7 million, were made by Centrelink in 2009-10.
