Mr Abbott went to last year's election promising a judicial inquiry into an Australian Workers Union slush fund but the government is considering expanding the scope of that in the wake of the new corruption allegations.
A joint ABC-Fairfax Media investigation claims union officials are making corrupt deals to help companies linked to organised crime secure construction contracts.
Victoria's desalination plant and the Barangaroo development in Sydney are among a number of projects that companies connected to major crime figures are reportedly involved in.
"We made a commitment pre-election that there would be a judicial inquiry into union slush funds and a royal commission is, in fact, a judicial inquiry," Mr Abbott told reporters in Canberra on Tuesday.
But he would not give a time frame for when any inquiry might take place, saying the government would make announcements "in due course".
The prime minister said the new reports of bribery and kickbacks demonstrate the need for the re-establishment of the Australian Building and Construction Commission (ABCC) as a "strong cop on the beat".
When he was John Howard's workplace minister Mr Abbott established the Cole Royal Commission into the construction industry, which led to the ABCC being set up.
The former Labor government dumped it in favour of a Fair Work inspectorate and now is joining with the Australian Greens to block legislation re-establishing the ABCC.
"When the ABCC was operating ... we got a much stronger observance of the ordinary law of the land in the commercial construction industry," Mr Abbott said.
"Once you've got a strong cop on the beat, the whole culture of an industry improves.
"That's the tragedy of this particular industry over the last couple of years with the ABCC emasculated then abolished."
Master Builders Australia also wants the ABCC brought back, although it noted the commission didn't have powers to directly act against criminal behaviour.
Labor says police are best placed to deal with corruption or crimes anywhere and it's not necessary to spend taxpayer money setting up new bureaucracies.
"If there's anything of a criminal dimension in this sector then that should be investigated by the police, not by public servants or by new bodies," opposition workplace spokesman Brendan O'Connor told AAP.
Construction, Forestry, Mining and Energy Union (CFMEU) national secretary Dave Noonan also wants a full police investigation of any allegations.
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