Labor will rein in public spending on contractors if the party wins the next federal election.
Another 1200 permanent workers would join the Department of Human Services if Labor wins the next election, through changes to the public service that would include reining in spending on contractors.
The ALP wants to end the "false economy" of keeping public servant numbers low but paying big dollars for contractors and consultants.
Labor's finance spokesman Jim Chalmers says a Labor government will back a review of the public service, as well as pushing for specific changes.
"The point here is that one saving on public servants ends up costing taxpayers much more in consultants, contractors and labour hire," Mr Chalmers said in a speech in Canberra on Thursday.
"It doesn't make sense to move to a cheaper phone plan only to end up paying more in data usage charges."
Labor says contracting IT staff in the public service currently costs about double what it costs to hire permanent staff to do the same job.
"Agencies will have to ensure APS employees take on a greater role in IT projects," Mr Chalmers said.
Labor would also abolish the average staffing level cap, which Mr Chalmers called a "perverse incentive" to hire more contractors.
The funding levels of agencies would remain capped.
Through doing away with the cap, Mr Chalmers said the government could hire another 1200 permanent, full-time staff at DHS to improve service wait times.
The promise comes after Human Services Minister Michael Keenan announced funding on Wednesday for an extra 1500 contractors to help the welfare agency cope with the one million calls it receives every day.
Labor social services spokeswoman Linda Burney said the government has cut about 2500 permanent roles from Centrelink in the past two years and should not expect kudos now.
"They've tried to hide their cuts with temporary, outsourced jobs and now expect a pat on the back for doing so," she said in a statement on Thursday on the $196 million worth of hires.
Labor has also proposed reducing spending on travel in the public service by 10 per cent.
"There should be a greater focus on alternatives such as tele and video conferencing where appropriate," Mr Chalmers said.
The party would not go ahead with a remaining 0.5 per cent additional efficiency dividend next financial year.
Mr Chalmers welcomed the government's recently announced review of the public service and says Labor will work with it to ensure it isn't used for ideologically-motivated cuts.