The government announced a policy on Wednesday that would force all federal departments to justify their continued presence and that of their portfolio agencies in Canberra and other capital cities or else face a forced move to rural or regional Australia.

If the Nationals make good on their rhetoric, the policy could result in the most serious assault on the economic fabric of the national capital since its establishment 104 years ago.

As the controversy surrounding the compulsory relocation of the pesticides authority out of the capital continued on Wednesday, Nationals deputy leader Fiona Nash announced that all departments in the 155,000-strong Australian Public Service were to be assessed for "decentralisation" from Canberra and other cities.

About 57,500 public servants, or 37.5 per cent of the federal bureaucracy, work in Canberra, a figure which is in steady decline.

But the Nationals' latest move is a massive escalation of the party's policy, pursued with the acquiescence of their Liberal coalition partners, of moving small agencies in the agricultural portfolio out of Canberra and into Nationals-held seats.

ACT Liberal senator Zed Seselja broke ranks on the decentralisation push on Wednesday night, saying departments shouldn't have to "waste time justifying why they should stay in Canberra".

He stressed only non-policy related areas of the public service would be impacted.

"If the Commonwealth wants to consider moving government departments they should be moved from Sydney or Melbourne rather than Canberra, which is a regional centre.

"I have been on the record and made it very clear that I support Canberra as the national capital and the centre of government," he said.

The cost of moving the Australian Pesticides and Medicines Authority with fewer than 200 public servants, to Armidale in the heart of Deputy Prime Minister Barnaby Joyce's electorate, has been estimated officially at $26 million but Labor says it might cost up to $60 million.

Now, giant operations like Immigration and Border Protection, Defence and Human Services, each of which has many thousands of public servants based in the capital, must justify their presence in Canberra or potentially face the same fate as the APVMA.

"I'll be responsible for creating a template for government ministers to assess which departments are suitable for decentralisation by mid-year," Senator Nash said on Wednesday.

"Departments will need to either indicate that they're suitable to move to the regions or justify why all or part of their operation is unsuitable.

"All portfolio ministers will need to report back to Cabinet by August on which of their departments are suitable to be moved to regional Australia, and relevant ministers will need to report to Cabinet with robust business cases for decentralisation by December."

Senator Seselja, the Assistant Minister for Social services and Multicultural affairs, said he would fight to ensure departments remain in Canberra and stressed local impact assessments would be considered as part of any moves.

"The relocation of a small department like APVMA was difficult enough and resulted in the loss of a large proportion of highly trained specialist staff," he said.

Shadow assistant treasurer Andrew Leigh, who represents the north side of Canberra, accused the government of hypocrisy.

"The Turnbull government is trying to rip apart the nation's capital," Dr Leigh said.

"For a government which preaches efficiency and joined-up government it is immensely hypocritical that they are pursuing a policy that will make government more inefficient and more fragmented."

Labor's agriculture spokesman Joel Fitzgibbon, said he was skeptical of the Nationals' ability to deliver on their ambitious rhetoric.

"Without a proper assessment of costs, decentralisation risks being an expensive policy failure, and an empty promise for regional and rural Australians," Mr Fitzgibbon said.

"Capital city and regional residents alike need to know whether Senator Nash's National Press Club speech today reflects government policy or is just more political spin.

"Labor fully supports job creation in regional Australia, and recommends the government start by properly staffing existing government agency offices in regional areas, including Centrelink and the ATO.

"The Turnbull government has a terrible track record in looking after public service jobs, has cut 18,000 jobs overall, including 200 ATO staff sacked in Townsville."