Welfare recipients will soon receive an extra $40 a fortnight and could potentially be allowed to work more hours without losing their benefits.
Opposition Leader Peter Dutton has clarified the coalition won't stand in the way of a welfare payment rise but will push for changes to increase incentives to work.
The federal government announced the increases to JobSeeker, rent assistance, pensions and parenting (single) payments in the May budget.
Its Safety Net Bill is expected to pass in this sitting of parliament ahead of the payments coming into effect by September 20.
The opposition is proposing the current Jobseeker rate be maintained and recipients be allowed to undertake paid work up to $300 a fortnight, instead of $150 under Labor, without losing their full benefits.
Mr Dutton said while the money Labor has budgeted for the increase could be better spent on a model that allows people to work more hours, the Liberals won't oppose it.
But in any case, he doesn't expect the coalition's proposal will be supported by the parliament.
"Ultimately, if that goes down - as we suspect it will, unfortunately, because I think it's good policy - then we'll support the government's increase of $40," he said in Canberra on Monday.
Mr Dutton also said if the Liberal-Nationals were re-elected to government they would not repeal the benefit rise.
Social Services Minister Amanda Rishworth said the opposition's proposal would have unintended consequences and do nothing for the 77 per cent of recipients who don't access the income-free threshold.
She also said it would not address the barriers to employment faced by people on income support.
"Our conservative estimates are that with a doubling of the income-free area, there would be an additional 50,000 people who would become eligible for JobSeeker overnight because the thresholds at which they are cut off would increase," she said.
"This measure could actually encourage a longer-term reliance on casual work and JobSeeker rather than a transition into the workforce."
A leading welfare advocacy group said the income-free threshold was $300 in 2020/21 before the coalition government cut it, and urged the Albanese government to reinstate the higher level.
"The government should be adopting every proposal that would help ensure welfare recipients and low income workers are not living in poverty," Antipoverty Centre spokesperson Kristin O’Connell said.
"They must urgently increase the income-free area to provide better support to the one in five people on unemployment payments who are employed and ensure the lowest income workers are better connected to the safety net."
Greens senator Janet Rice said Australia no longer really had a welfare safety net.
"Labor's $4 a day increase to JobSeeker is woefully inadequate ... We can afford to increase the rate of income support to above the poverty line," she told reporters in Canberra.
"It's so important for our country that we don't have a permanent underclass of people that just cannot afford to be part of society."
Under the payment rise, single Australians with no children on Jobseeker can expect to get around $749.20 a fortnight, up from $693.10. The rates for other Australians are higher or a little lower depending on age, dependents or relationship status.
Rent assistance will rise by between $18-$37, depending on the household type.