The Abbott government insists it has no plans to either privatise or unwind the national disability insurance scheme.
But it could allow the National Disability Insurance Agency (NDIA) to contract out some administrative functions to the private and not-for-profit sectors.
Treasurer Joe Hockey had raised as "just an idea" the possibility the agencies administering the landmark scheme could be abolished or scaled back with their roles assumed by Medibank Private.
The idea is part of the government's push to streamline service delivery and cuts costs.
Both Labor and the Australian Greens reacted furiously to Mr Hockey's comments.
"We will fight this with every inch of our efforts," Opposition Leader Bill Shorten told reporters in Melbourne on Friday, adding Labor was justifiably proud of the scheme's establishment by the Gillard government.
The Greens suggested a potential transfer of responsibilities to Medibank was code for winding back the NDIS.
Not so, says Assistant Minister for Social Services Mitch Fifield.
"Contrary to Labor scaremongering, the coalition has no plans to privatise or unwind the NDIS," he said in a statement.
The government would honour Labor's announced spending for the scheme's roll-out agreements that were in place between the commonwealth and the states and territories.
But Senator Fifield said new service providers were emerging for the scheme and it may be that Medibank Private chooses to offer services in the market.
"That is a matter for them."
The government says the NDIS will not be exempt from its commission of audit which is examining government operations and finances.
All federal departments and agencies should be open to advice on best administrative practice to ensure services were delivered efficiently and well, Senator Fifield said.
The NDIA board may determine, in light of its launch site experience, that some administrative functions could be contracted out through a competitive process
Jenny Macklin, the former Labor minister responsible for establishing the NDIS, insists it needs an independent authority to look after its delivery.
"Keep your hands off," was her message to the Abbott government as she joined Mr Shorten.
Ms Macklin, now the opposition spokeswoman for disability reform, said the changes could put at risk decades of hard work from people with a disability, their families and carers.
Mr Shorten was scathing of Mr Hockey's "just an idea" comment, saying people with disabilities did not deserve to have their lives disrupted by "ill-thought-out coalition thought bubbles".
"The government needs to realise they're in government now - when they have a thought bubble this affects the security and wellbeing of thousands of Australians."
Senator Fifield said the coalition had enthusiastically supported the NDIS through parliament and was committed to rolling it out.
