Welfare groups have criticised less generous unemployment benefits while businesses have welcomed the extension of wage subsidies in the overhaul of the government's coronavirus supports.
JobSeeker will be cut by $300 in late September but recipients will be able to earn that much in wages without getting their dole payments clipped.
The payment, which has been artificially boosted throughout the coronavirus pandemic by using supplements, could change again in December.
Cassandra Goldie from the Australian Council of Social Service says the reduced rate and long-term uncertainty would have a severe impact on millions of people.
"The full supplement should be maintained until it is replaced with a permanent, adequate increase," she said on Tuesday.
"Millions of people will have less to spend on the essentials in local businesses, which in turn could lead to further economic pain and unemployment."
Unions are alarmed JobSeeker recipients will need to apply for four jobs a month from August.
"The reintroduction of mutual obligations is a worrying return to the punitive approach to welfare payments," ACTU secretary Sally McManus said.
JobKeeper wage subsidies will be extended until March but reduced in two stages and according to whether an employee is part-time or full-time.
From the end of September, JobKeeper will be reduced to $1200 per fortnight for full-time workers and $750 for people working 20 hours or less.
From January, the payment will be further reduced to $1000 for full-time employees and $650 for part-time workers.
The Australian Retailers Association's chief executive Paul Zahra said this would help struggling businesses through Christmas.
"The decision to extend the scheme will ensure that jobs in the retail sector, many of which are held by women and young people, will be preserved through a period that is vital for retailers' recovery," he said.
Tourism and Transport Forum chief executive Margy Osmond said the JobKeeper extension was a genuine lifeline.
"JobKeeper 2.0 will help to save thousands more tourism employees from the unemployment queue and keep them in jobs," she said.