Seven thousand public service call centre jobs are at risk, unions say, with word that Telstra will answer the phones for Centrelink and Medicare.

The Department of Human Services (DHS), one of the largest parts of the government, has announced that it “proposes partnering with Telstra to deliver call centre services”.

The notice came as a shock to the thousands od workers in the agencies’ call centres.

As of Wednesday evening, Telstra and DHS were denying that a deal had been reached, but did admit that a proposed “arrangement” could see outsourcing at offices in NSW and WA.

A DHS spokesperson has told reporters that the union's claim about 7,000 jobs was “completely wrong”.

The department says Telstra will be its "partner" in future telephone services, and will train public servants in “industry best practice” using the telco's “contact centre management” expertise.

But the CPSU is not buying it, claiming jobs are still at risk for 7000 workers in 28 “smart centres” around Australia.

“Staff are shocked and dismayed at the news,” CPSU national secretary Nadine Flood told the Canberra Times this week.

“Human Services workers handle everything from your gran's pension, your own medical records, as well as provide vital support in times of emergencies such as drought or bushfires.

“The work is too important to outsource and most Australians would be appalled to hear that their records might be sent offshore,” she said.

Telstra has outsourced thousands of its own positions to Asia in recent times, and the union says a reference to third-party providers in the deal could be an omen of the future.

Telstra and DHS have separately indicated there may be some link in the future, but are adamantly denying such a deal has been reached just yet.