Scott Morrison is slashing the number of federal government departments and sacking five senior bureaucrats in a major shake-up of the public service.
Labor and unions say it is the wrong call at a time of job insecurity and could undermine frontline services Australians rely on.
Four new super departments will be created as the prime minister attempts to cut red tape.
Mr Morrison said the changes were not about cutting jobs or making savings.
"I'm ensuring the Australian public service is lean and mean and focused on the job of delivering for Australians," he told parliament on Thursday.
He said fewer departments would allow the government to "bust bureaucratic congestion and improve decision-making".
The public sector union said the prime minister had his head in the sand and was choosing smoke and mirrors over real action.
"Dismantling departments won't improve services to the community, won't get phones answered or claims processed," CPSU national secretary Melissa Donnelly said.
"What we need is simply enough permanent staff to do the work at hand."
She noted that since 2013 nearly 19,000 public service jobs had been lost.
One of the sacked department secretaries said he was blindsided by the purge.
"I was told of the government's decision to abolish the department late yesterday afternoon," Mike Mrdak told Department of Communications staff.
"We were not permitted any opportunity to provide advice on the machinery of government changes, nor were our views ever sought on any proposal to abolish the department or to changes to our structure and operations."
The number of government departments is being reduced from 18 to 14.
Four new mega departments will be created before parliament resumes early next year, including:
* Education, Skills and Employment
* Agriculture, Water and the Environment
* Industry, Science, Energy and Resources
* Infrastructure, Transport, Regional Development and Communications.
Mr Morrison nominated the education department changes as critical to economic reform, linking school education, skills and training and tertiary education.
Opposition Leader Anthony Albanese is deeply sceptical.
"This is about centralising power," Mr Albanese told reporters.
"This prime minister has been making cuts to the public service continuously since they were elected in 2013."
Labor's public services spokeswoman Katy Gallagher said that at a time of economic uncertainty "the last thing this nation needs is more jobs cuts".
The changes will not trigger a ministerial reshuffle.
"I am very pleased with the performance of all of my ministers," the prime minister said, confirming embattled Energy Minister Angus Taylor would be keeping his job.