Private employment agencies are reportedly ripping off a taxpayer-funded program designed to find jobs for unemployed people.
But the federal government is confident it has cracked down on the problem and improvements will be made in a matter of months.
An ABC TV investigation has found widespread rorting of the billion dollar Job Services Australia scheme, through which the government pays agencies to find and keep job seekers in work.
Some agencies are forging job seekers' signatures to claim thousands of dollars in fees from the government, while others are manipulating records or lodging inflated claims for fees.
One man was left homeless because he had to pay back money to the government after a doctored document falsely claimed he had worked, a whistleblower told the Four Corners program on Monday.
Loopholes were also exposed in a government wage subsidy scheme that pays employers to take on the unemployed.
The government says it is overhauling the scheme under changes to come into effect in July.
The new system will include better performance monitoring, reporting and quality assurances, Assistant Employment Minister Luke Hartsuyker said.
Agencies will undergo more rigorous quality standards to be eligible to deliver services.
"The coalition's new employment services system will undo Labor's mistakes and restore greater integrity to the system," he said in a statement.
The peak body representing non-profit employment organisations, Jobs Australia, said there were legitimate concerns about some factors that underpin the Job Services Australia scheme.
However, its achievements also deserved to be acknowledged.
It said the scheme assists about 800,000 job seekers at any point in time, and that more than a quarter of job seekers find a job and exit JSA within three months.
This was despite the fact that the system was "incredibly complex, with a confusing payment model and thousands of pages of rules that must be interpreted and applied by individual staff".
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