Federal parliament is setting up a new committee to look into the development of rural and regional Australia.
The select group of 10 MPs will also examine the potential to relocate government agencies and functions from the cities.
"We believe it's important to show people how important decentralisation is," Deputy Prime Minister Barnaby Joyce told reporters on Thursday.
It follows a Senate inquiry into decentralisation and has the support of crossbenchers.
"It was really remarkable how the Labor party managed to stack it with three Labor party people, three Greens, one Nationals and one Liberal and the only regional town they went to was Townsville," Mr Joyce said.
Labor's rural and regional spokesman Joel Fitzgibbon called the government's announcement a squib, saying he and independent MP Cathy McGowan were calling for a joint houses committee.
"It wants a House of Representatives committee where it has the numbers, where it can totally control the inquiry and its recommendations," he said.
Mr Joyce said if the decentralisation agenda could be driven in a bipartisan way the nation would be a stronger place.
Labor supports the move but has vowed to keep a close eye on future attempts to decentralise federal departments.
It has been critical of the Australian Pesticides and Veterinary Medicines Authority being moved from Canberra to Armidale at the behest of Mr Joyce.
"We argue that it doesn't make sense to be moving agencies or parts of agencies from capital cities into regional centres if, at the very same time, you are cutting jobs from other agencies that already exist in those regional areas," opposition frontbencher Stephen Jones told MPs.
Mr Joyce said Labor was railing against a move which would make sure the largesse of government was more evenly spread around the country.
Liberal senator Ian Macdonald said federal bureaucrats should face the sack if they refused to relocate to regional areas.
Labor frontbencher Andrew Leigh said that would rip the heart out of Canberra.
"Pork barrelling jobs to the regions is bad for Canberra and bad for the nation," the ACT MP said.
