Foreign Affairs Minister Penny Wong asked Optus to cover passport application fees for those caught up in the massive data breach last week, which affected millions of Australians.
Passport numbers are among the personal details accessed in what the federal government has described as a basic hack Optus says the data breach was due to a sophisticated operation.
The cost of drivers licenses for those who need them in some states and territories will be covered by the company.
The Foreign Minister has asked for the bill to cover the cost of new passports in a letter to Optus chief executive Kelly Bayer Rosmarin.
Senator Wong said that the serious incident creates a risk that current and former mutual customers of the Australian Passport Office and Optus will be subject to exploitation by criminals.
There is no justification for these Australians to bear the cost of a new passport, or taxpayers more broadly on their behalf. A passport costs $193 to replace, while a passport costs up to $308.
The cost for replacing passports and other personal documents could run into the tens or hundreds of millions of dollars, with millions of Australians affected by the breach.
The Opposition had previously suggested that the government should waive the fees, but Prime Minister Anthony Albanese said the cost must be with Optus.
He said that those opposite want taxpayers to pay for the problem caused by Optus and their failures on cybersecurity and privacy.
That is not our approach, but we believe Optus should pay, not taxpayers. The Coalition's spokesperson on cybersecurity, James Paterson, said the government had to make sure those affected were not left to pick up the bill.
If you're a victim of the Optus attack and feel you need a new passport, you shouldn't be paying $200 out of pocket because you're a victim, he said.
The federal government should step in and make sure it's paid for not by the victims, but by Optus. New South Wales and the ACT have confirmed that Optus will reimburse customers for the cost of replacing drivers licenses through their Optus accounts.
Optus has been contacted for comment.