Having promised a specific judicial inquiry into the Australian Workers Union, the government is set to expand it into a broader union corruption probe.

The Abbott government will launch a royal commission into union corruption which goes further than the coalition flagged before the federal election.

The coalition went to the 2013 election promising to restore the building and construction industry watchdog and hold a judicial inquiry specifically into fraud allegations against the Australian Workers Union.

But Prime Minister Tony Abbott on Tuesday said recent reports of other alleged corruption in the trade union movement meant that a “full inquiry” was required.

A joint ABC-Fairfax Media investigation claims union officials are making corrupt deals to help companies linked to organised crime secure construction contracts.

Victoria’s desalination plant and the Barangaroo development in Sydney are among a number of projects in which companies connected to major crime figures reportedly are involved.

Mr Abbott said he had been following the issue during the past few weeks and months, noting there had been calls including from those inside the union movement for a full inquiry.

He said a royal commission was a form of judicial inquiry.

The prime minister said the new reports of bribery and kickbacks also demonstrated the need for the re-establishment of the Australian Building and Construction Commission.

“Once you’ve got a strong cop on the beat, the whole culture of an industry improves,” he told reporters in Canberra.

The former Labor government dumped the ABCC in favour of a Fair Work inspectorate and together with the Australian Greens is blocking legislation for its re-establishment.

Master Builders Australia also wants the ABCC brought back, although it noted the commission didn’t have powers to directly act against criminal behaviour.

Labor says police are best placed to deal with corruption or crime.

“If there’s anything of a criminal dimension in this sector then that should be investigated by the police, not by public servants or by new bodies,” opposition workplace spokesman Brendan O’Connor said.

Construction, Forestry, Mining and Energy Union (CFMEU) national secretary Dave Noonan said his union would act immediately if it was made aware of any improper, illegal, corrupt or criminal activity by officials.

The union had terminated the employment of officials who had engaged in such activity in the past, he said.

“We would not hesitate to do so in the future, if warranted.”

The Victorian CFMEU last week sacked an organiser on the grounds of misconduct, branch secretary John Setka confirmed on Tuesday.

The government may also examine rules relating to union donations to political parties as part of a review of the 2013 federal election, which is the subject of a parliamentary committee inquiry.

Mr Abbott said any decision on electoral reform would wait until after the committee reported.