Labor has asked federal police to investigate whether the minister responsible for Centrelink broke the law in sharing private information without consent.
Opposition MP Linda Burney has asked the AFP to investigate whether Human Services Minister Alan Tudge acted illegally in releasing an individual's personal Centrelink details to the media.
"The actions of Mr Tudge are reckless and immoral at best and illegal at worst," Ms Burney told reporters in Canberra on Thursday.
"Did he respond through political vindictiveness or did he respond to correct the record in light of the Social Security Act?"
The minister quickly responded, saying information he provided to the media was approved by his department's chief lawyer to correct false assertions from the individual involved.
"If unanswered, accusations of this kind may have the effect of diminishing public confidence in (public institutions)," Mr Tudge told AAP.
Ms Burney's referral came hours after Centrelink bosses, appearing before a Senate estimates hearing, were grilled about sharing private client information with the media.
Human Services head Kathryn Campbell said the agency could release information to "correct the record" in a bid to maintain integrity and confidence in the system, and had done so for many years.
Centrelink bosses agreed an individual's personal information handed to a journalist last week was protected information, saying it was run by the minister's office first and provided under lawful exemptions.
The same exemption had been used many times.
Releasing the information was "essential" for retaining public confidence in the welfare system.
"The only information which we are able to release is information which is specifically to correct the record," Human Services staffer Jonathon Hutson told senators.
"Information concerning an individual which has not been made otherwise public is not released and has not been released in this circumstance."
Ms Campbell said the person involved made a number of unfounded claims which could have a knock-on effect.
"It was in the opinion of officers that this was likely to concern other individuals, that they may see this and think that they too had erred and not met their commitments."
Ms Campbell also backed the welfare agency's controversial debt recovery system.
She said "data-matching" in debt recovery is nothing new and almost half of recent complaints aired in the media have nothing to do with Centrelink's automated system.
Ms Campbell conceded about 6600 people learned about money owed to Centrelink through debt collectors.
But the number was far short of the "hundreds of thousands" reported in the media and the agency was now using registered post and other measures to avoid problems with its debt letter mailouts.
It was also confirmed Centrelink staff trawl social media for complaints about the welfare agency and may refer serious gripes to the responsible minister.
Senior bureaucrats responsible for Centrelink say their workers sift through print, broadcast and social media for individual complaints.
Deciding on whether to report grievances to the human services minister depended on the circumstances of each case.
