Centrelink says its staff breached privacy regulations 367 times in the past financial year, but only two employees were sacked.
The federal welfare support agency's checks also identified 289 conflict of interest cases, general manager Hank Jongen said.
He said 24 employees resigned and two had been sacked because of the breaches.
Mr Jongen said a privacy breach occurred when an employee accessed personal information when it was not part of their duty, commonly referred to as browsing.
"Last financial year, there were 367 proven privacy breaches," he said in a statement.
"It's important to note more than 40 per cent of these privacy breaches related to misdirected mail resulting from human error, and not employees browsing customer records.
"Our checks also identified 289 conflict of interest cases, which are breaches of the Australian Public Service code of conduct, rather than a breach of privacy."
An example of this was where an employee was not authorised to access their own customer record, or records of family members, ex-partners, neighbours or close personal friends, even if the individual asked them to do so.
"Of the proven privacy and code of conduct breaches, 24 employees resigned and two had their employment terminated," he said.
"Another 296 employees received a written warning, 13 were reprimanded and 44 were fined or had their salary reduced."
Mr Jongen was responding to a Seven Network report which said about 140 employees had been sacked over the past couple of years and that Centrelink was investigating 547 privacy breaches by staff inappropriately accessing clients' personal details.
He said Centrelink had a robust monitoring system which used advanced data-matching analysis capabilities to continually monitor employees' access to customer records.
"The information released under Freedom of Information was based on the results of a raw data-matching exercise in 2005 that was broadly cast to identify all potential breaches of privacy and conflict of interest," he said.
"Further analysis showed most of these data matches didn't disclose any breach of privacy or other misconduct.
"The overwhelming majority of our 26,500 employees perform their duties in a highly ethical and responsible manner.
"However, we're constantly monitoring our customer records to make sure we quickly identify employees who aren't upholding these values."