Last week the government announced plans to extend the coronavirus supplement beyond September at a cost of $3.8 billion.

But, the move also saw the payment reduced from $550 per fortnight to $250.

The Australia Institute released modelling which showed 370,000 Australians, including 80,000 children, would find themselves living below the poverty line because of the decrease.

Modelling showed 10,000 Tasmanians, including 3000 children, would be pushed into poverty because of the changes.

The Australia Institute Tasmanian director Leanne Minshull said the supplement had played an important part in Australia's response to the recession.

She said it had improved hundreds of thousands of lives.

"No other federal government has ever lifted so many people out of poverty so quickly," Ms Minshull said.

But concerns remain about decreasing the supplement.

"The federal government has only guaranteed the reduced supplement through to December, leaving many Tasmanians fearful it could be cut further in the lead-up to Christmas," Ms Minshull said.

"As unemployment has increased over recent months, the JobSeeker supplement has been the only thing standing between many recently jobless Australians and poverty."

Tasmanian Liberal Senator Wendy Askew said the government wasn't cutting the payment.

"The truth is that the Morrison coalition government is extending the temporary Coronavirus Supplement from 25 September 2020 to 31 December 2020," she said.

"From 25 September ... the supplement will be $250 per fortnight to reflect the gradually improving economic and labour market conditions."

She said changes to the JobSeeker and Youth Allowances payments would encourage people to re-enter the workforce.

"Individuals will be able to earn up to $300 per fortnight without foregoing any JobSeeker payment or affecting their eligibility for the coronavirus supplement," Senator Askew said.

Tasmanian Council of Social Service chief executive officer Adrienne Picone said the new figures highlighted what they already knew.

"Our fellow Tasmanians are suffering with low incomes resulting from job losses," she said.

"Until there are more jobs available for Tasmania's increased number of job seekers, supports must be maintained to enable retraining and reskilling as we rebuild both socially and economically."

She said local shops and communities benefit when Tasmanians living on a low income have enough money to afford essentials.

"The federal government's cruel approach to Australia's support system means Tasmanians living on low incomes continually struggle just to get by," Ms Picone said.

"We expect our governments to exercise compassion and provide ongoing and adequate support in this time of heightened need in Tasmanian communities."