Draft laws will be brought to federal parliament to head off a hit to the budget of up to $8 billion.
The laws relate to a successful Federal Court case brought by foreign affairs official Brendan Peace and other parties, who argued the Commonwealth should have paid him superannuation for a rent-free accommodation allowance received on overseas postings.
It was argued the Commonwealth was in breach of enterprise agreements and federal workplace laws, reducing the value of Mr Peace's superannuation entitlement.
The Labor caucus was told at a meeting on Tuesday the government would bring laws to parliament the following day to knock out what was described as a "windfall gain" totalling between $3 billion and $8 billion.
The laws would be retrospective, meaning around 10,000 public servants employed since 1986 would not be able to access lump sums, which could be worth up to $11 million each.
Support is being sought from the Liberal-National coalition for the bill, which the government hopes will pass by the end of the week.
