Dozens of living in Australia after receiving medical treatment lost their $200 fortnightly welfare payment from Monday.
They have three weeks to leave their government housing, an Immigration department notice has confirmed.
Immigration Minister Peter Dutton said around 60 people - mostly single men - would receive notice letters imminently.
"From Monday 28 August you will need to find money each week for your own accommodation costs. From this date you will also be responsible for all your other living costs like food, clothing and transport," the letter reads.
"In the next three weeks you need to move out of government-supported accommodation."
The crackdown may eventually affect around 400 who came from the offshore detention centres on Manus Island and Nauru to receive medical treatment in Australia.
The nation’s peak legal body has hit out at Immigration Minister Peter Dutton for claiming lawyers who represent certain are un-Australian.
Mr Dutton's comments around the issue came while discussing the federal government’s plans to kick off dozens of brought to Australia for medical treatment off welfare and public housing.
In an intervew with broadcaster Alan Jones, the minister criticised “political correctness” and “feel good events” taking place around the country.
“It extends to some of our major law firms where part of their social justice agenda is for pro bono work to be provided,” he told on 2GB radio.
“So there are lawyers across the country who are providing pro bono support to people in this situation. And they lodge their papers in the High Court and it costs taxpayers tens of millions of dollars to defend these actions.”
Mr Dutton said advocates knew when were arriving in Australia for medical help and accused lawyers of seeking out subsequent court action.
The minister, when asked by Jones if this was “un-Australian behaviour” said “of course it is".
“It’s gone on for too long and I think people believe in a fair go but this is ripping the system off,” Mr Dutton added.
“These people need to return to their country of origin or back to Nauru or Manus whence they came, and that’s the arrangement.
“These lawyers have been playing the game with these people who are willing participants.
“We are a generous nation but we are not going to be taken for a ride.”
'An extraordinary break with history'
The Law Council of Australia said the comments were regrettable and misguided, saying it was an attack on the profession.
"There is nothing more Australian than ensuring people are subject to the rule of law and have their legal rights protected,” President Fiona McLeod said.
Lawyers were helping pursue rights that exist under international and Australian law, she added.
"It is true that the legal rights of individuals can be an inconvenience to government, so attacking the legal professionals who work pro bono to defend those rights is truly extraordinary.”
"The Australian legal system reflects fundamental Australian values, including the right to have your case heard, the right to not be arbitrarily detained and the right not to be subjected to cruel or inhumane treatment.
"It is often the case that those seeking asylum are fleeing countries where the rule of law has broken-down.
"We have a long and proud history of politicians understanding the importance of showing respect for the independence of our legal system. Today's comments represent an extraordinary break with that history," Ms McLeod added.
The minister said many of the were in a better position than pensioners who paid taxes most their lives.
“Many of these people are provided with houses. This is the arrangement... because it’s cheaper ultimately than keeping people in detention.”
