Social Services Minister Kevin Andrews yesterday warned Australia's welfare system was unsustainable and needed an overhaul to bring spending under control.

"More than five million people now are in receipt of one form of welfare or another," Mr Andrews said yesterday.

According to the latest figures available, 7056 people in the Illawarra received unemployment benefits in November last year.

Illawarra Legal Centre's welfare rights solicitor Liz Turnbull said the social security landscape had changed dramatically since the last welfare system review in 2000 and a new review was welcome.

Any changes to the welfare system would affect on the Illawarra because of its high unemployment rate and the number of people reliant on welfare benefits, she said.

Ms Turnbull recommended scrapping the "wasteful" income management scheme and the proposed paid parental leave scheme, in favour of increasing benefits to those on the Newstart allowance.

"Reports from my clients are that it's really difficult to survive on the low rate of Newstart payments," she said.

A peak body working for community services in the region called on the government to be transparent and consult community services and individuals receiving benefits.

Illawarra Forum's chief executive Nicky Sloan said the review should improve the lives of disadvantaged and vulnerable people.

"This could be an opportunity for us to be sitting down with the government and really having a good look at the system," she said.

"Changing unemployment benefits doesn't create jobs. A really open, consultative process could bring some viable change."

Former Mission Australia head Patrick McClure will lead the review and is expected to report back in February.