Former Labor leader and Opposition services spokesman Bill Shorten has announced that a class action will be launched against the Government over the controversial “robodebt” scandal.

Gordon Legal, who will lead the proposed class action, say they will allege the federal government financially benefited through the robodebt algorithm, when it wrongfully collected and banked money that legitimately belonged to recipients.

Peter Gordon, a senior partner at the firm, said up to 160,000 errors could be blamed on robodebt, and the legal action would seek both repayment of falsely claimed debts and compensation for people affected by the scheme.