The federal government took years to pay back unlawful debts to vulnerable people, the royal commission into the Robodebt scheme has heard.

Deanna Amato, who successfully sued the federal government over Robodebt in 2019, fronted the inquiry today.

Ms Amato had a $4,000 debt, allegedly related to a study support payment she received for six months in 2012.

She was joined by top lawyers from Victorian Legal Aid acting chief executive Rowan McRae and economic and social rights managing lawyer Miles Brown.

She said facing the Commonwealth in court was not easy, but she knew others had experienced worse hardship.

"I was very scared. It gave me a bit of anxiety. It wasn't an easy decision, but seeing the documents for myself, it seemed really obvious where the mistake happened and I just felt like I was in the right place to do it because it was just so obvious," Ms Amato told the inquiry.

Ms McRae said in 2017, Victorian Legal Aid saw a 500 per cent increase in the number of people accessing social security information on their webpage.

She said many people who connected with the legal service had reported they were not having rights of review recognised.

She said even after Ms Amato's case, it continued to be difficult for those with false debts to communicate with Centrelink or get their money back.

Ms McRae said many people gave up trying to disprove the debts because it became just too difficult.

"I think that's one of the most egregious aspects of the scheme, that ultimately people were paying the government money they didn't in fact owe and these were some of the most disadvantaged people potentially in Australia," she said.

'Toxic' scheme 'kicked people while they were down'

Mr Brown spoke about people feeling "disempowered" by the government through a scheme that was "toxic for their wellbeing".

He said the design of the program was "patronising" and many clients struggled to understand the communication they received, let alone respond to it.

Mr Brown detailed the story of one client that had been subject to the scheme while homeless after fleeing a violent home.

"The only money she was receiving was from Centrelink payments [which] went towards food and medication," he explained.

"Then one day there was less money in her account. She thought it was a mistake. She spoke to Centrelink. She discovered that there was a debt that had been created, that she needed to go back to all her old employers, find those pay slips and it was impossible for her given the length of time that had passed.

"She said it felt like Centrelink was 'kicking me while I was down'."

Mr Brown said the woman described the situation as "the straw that broke the camel's back" when she was trying to find housing and mental health services.

He said she told him: "I was treated like a criminal. It felt like no one in government wanted to help me and instead I had to fight them in circumstances where I had no power, no control, and no ability to fight back".

Documents edited

Earlier, the inquiry heard cabinet documents detailing the proposal that became the illegal Robodebt scheme, did not mention the fact income averaging would be used.

Mark Withnell, an ex-Department of Human Services (DHS) general manager who was in charge of integrity at the department took the stand for a second time.

He was shown several documents that were sent to the then-Coalition government to approve Robodebt's early implementation.

"The new approach will not change how income is assessed or overpayments calculated," the documents explained.

Senior Counsel Assisting Angus Scott KC showed Mr Withnell a draft document of a new policy proposal to cabinet in 2015.

In edits to the document, the mention of income averaging had been removed, the inquiry heard.

Mr Withnell told the royal commission he believed at the time the policy had "moved away from the use of income averaging … to a different approach".

"Do you accept that if it was not the case that the proposal had moved away from the use of income averaging, this amendment that we've got on the screen here … was apt to mislead the reader of the document?" Mr Scott asked.