The decision of the Federal Government to conduct an audit into the controversial Green Loans scheme will cost taxpayers at least $4 million.

Federal Climate Change Minister Penny Wong said the failed programme include fraudulent activities, such as claims for non-existent properties and claims. Now, assessors will be sent to investigate these frauds, but taxpayers will be shouldering the cost of the probe estimated to reach $4 million.

The Labor government promised to provide no-interest loans of up to $10,000 to improve energy efficiency in up to 200,000 homes. The $300 million program was to fund measures such as solar panels and low-energy lighting but the Government axed the botched scheme in February.

Also included in the inquiry are assessors who were linked with the programme for possible involvement in fraud .

The auditors are required to report before the Australian Federal Police (AFP) any suspicion of breaches, Wong said.

"This is an audit that we are putting in place at a cost of $4.28 million to ensure that there are measures in place to combat these potential breaches," she said.

The Feds limited the number of registered assessors at 5,000 in February after noticing a sharp rise in the number of people who signed up for the free energy efficiency programme. The sheer volume of applicants far exceeded the government target.

Critics of the scheme claimed of poor monitoring of the programme as well as lack of access to loans.

Simon Birmingham a spokesman for the opposition said that the decision to audit the scheme underscores the failure of the programme and an admission by government of inefficiently it handled the energy efficient schemes.