The Federal Government has announced an independent review of its controversial IT outsourcing program following scathing criticism in recent months and a damning report by the Auditor General.

Minister for Finance and Administration John Fahey who is responsible for the program said the review will be undertaken by the managing director of the Australian Stock Exchange Richard Humphrey who will report to the government in December.

The specific focus of the review is to identify and assess the impact of a program which has involved the tendering of an unprecedented volume of IT outsourcing to private industry.

Five major contracts have already been let under the program and the remaining five yet to be tendered are on hold, including Group 9 which covers the CSIRO.

IT Opposition spokesperson Senator Kate Lundy who has been calling for an end to outsourcing said the review is an admission the program is a disaster.

"The Minister has now been forced to formally acknowledge that there are major structural flaws in the IT outsourcing initiative," she said referring to the Auditor General's report and recent figures released in the OASITO annual report.