Advocates have condemned a last-minute amendment to a federal bill which would give the government power to suspend or cancel welfare payments before a person is convicted of a crime.

The amendment to the social security bill, which was tabled in the lower house last week, accompanies measures offering up to $600 in compensation to around three million people affected by the unlawful Centrelink debt recovery scheme.

They would give the minister the power to stop welfare payments to individuals accused of a "serious violent or sexual offence" or those who "might prejudice the security of Australia or a foreign country" if an arrest warrant has been issued. Some of the welfare benefits at risk of cancellation include concession cards, pensions, JobSeeker, Youth Allowance, Family Tax Benefit and Parental Leave pay.

Independent Senator Lidia Thorpe and several welfare, Indigenous, and civil liberties advocates are calling for the amendment to be removed, arguing it would unfairly punish people who are entitled to the presumption of innocence. The Gunnai, Gunditjmara and Djab Wurrung woman also criticised the government for introducing the changes without parliamentary committee oversight.

The original bill, which comes in the wake of a High Court ruling, aims to establish a compensation scheme for those impacted by unlawful income apportionment, when their entitlements were incorrectly calculated by averaging incomes.

It was reviewed by both the Parliamentary Joint Committee on Human Rights and a Senate committee, both of which submitted reports last month. It is understood neither the Coalition nor the Greens were aware of the amendments.

Calling it a "shocking attempt to quietly expand police power into the welfare, tax and workplace relations systems," Senator Thorpe claimed the measures are "harsher than those levelled against people who have been convicted or incarcerated".

"The Government wants to let police cut off people's income on the basis of suspicion - not conviction, not a court decision, and before someone has even received legal advice," she said.

"It's a clear breach of the presumption of innocence and the separation of powers. No Minister should have power to punish someone just suspected of an offence without due process."

Chair of the National Aboriginal and Torres Strait Islander Legal Services (NATSILS), Karly Warner, said the amendment is an "unprecedented attack on fairness and due process which will shake public confidence in our legal system". She argued people's benefits could be stripped away, simply because they are "unaware police have issued a warrant for their arrest" or have had a chance to access legal advice.

"The proposed amendments will inevitably have a greater impact on Aboriginal and Torres Strait Islander people, who are grossly overrepresented at every stage of the criminal process," Ms Warner said. "Cutting off people's Centrelink payments will not only impact those individuals, but put their children and families - too many of whom already live below the poverty line - at risk of homelessness and child removals."

Home Affairs Minister Tony Burke, who would have final authority on any cancellations, told SBS News that "the Government shouldn't be paying people to hide from police".

Senator Thorpe said evidence shows police "routinely misidentify victim-survivors of family violence as perpetrators," with Indigenous women among the "most misidentified and over-policed people in this country".

"Under these powers, a woman fleeing an abuser could lose the only income keeping her and her kids safe," she said. "This move will hurt people who are already struggling the most in this country - victim-survivors of domestic violence, children, disabled people and First Peoples, particularly women."

The 2024 Senate Inquiry into Missing and Murdered First Nations Women and Children found the frequent misidentification of women as perpetrators places First Nations women in danger. It revealed that victims of domestic and family violence - including women who are later murdered - are often wrongly accused of serious offences by police

Bundjalung woman and Wirringa Baiya Aboriginal Women's Legal Centre CEO, Christine Robinson, said the organisation is concerned the amendments have been pushed through without scrutiny.

"As a service that works with Aboriginal women who are often misidentified as perpetrators, we see the many possible unintended consequences of this proposed amendment," she said.

"We urge the government to remove this amendment from the bill and go through the appropriate pathway to allow necessary scrutiny and input from stakeholders."

Senator Thorpe says the government's assurance that the powers would only be used in extreme cases is one "many have heard before," warning that "it's not long before they are abused and used against protesters, against young people, against First Peoples and the poor".

"Punishing people before they stand trial is fundamentally wrong. We cannot let Labor get away with this," she said.