The federal government has ruled out cuts to the age pension, but its welfare review has disability support and Newstart recipients in its sights.

Age pensioners are safe, but those on disability support and unemployment benefits could be on a hit list as the federal government reviews the welfare payment system.

Former Mission Australia boss Patrick McClure, who conducted a welfare review for the Howard government in 2000, will head the new inquiry.

More than five million Australians received a welfare payment in June 2012, including 827,000 recipients on the disability support pension and 550,000 on the Newstart Allowance, according to a 10-year Department of Human Services report.

However, the biggest slice of the welfare budget went to 2.3 million age pensioners.

Social Services Minister Kevin Andrews was quick to quash an opposition “scare campaign” that age pensioners would be targeted.

“(It’s) dead wrong,” he told reporters in Adelaide.

“The government is not proposing to cut the age pension.”

Instead, the review will look at the increasing numbers of people receiving the disability support pension and Newstart Allowance.

“This review is about the long-term sustainability of the welfare system,” Mr Andrews said.

“We’re in a very difficult budgetary situation.”

The review will consider changes to the rule that allows job seekers to turn down employment that is more than 90 minutes from their home.

Australian Council of Social Services chief executive officer Cassandra Goldie said common sense should be applied to such a change.

“It’s a big call when you have virtually no money behind you,” she said, referring to high travel costs, such as petrol.

In Mr McClure’s 2000 review, he recommended introducing one universal welfare payment, with top-ups for different needs.

Mr Andrews did not rule out the concept.

Opposition Leader Bill Shorten said he was alarmed by Mr Andrews’ comments.

“If this government wants to save money, scrap your gold-plated billionaires’, millionaires’ parental leave scheme,” he told reporters in Brisbane.

St Vincent de Paul Society chief executive officer John Falzon said a potential overhaul should not come at the cost of Australia moving from a modern social security system to a “semi-Dickensian” one.

He rejected the government’s assertion Australia would be headed to a European-style welfare system without a review.

“If we keep on talking this way, we’ll be going down the American road of low wages and an almost non-existent social security system,” he told AAP.

The review’s final report is due before the May budget.