An Australian government inquiry is to investigate labour exploitation following revelations of widespread abuse of foreign workers.

Allegations of unethical treatment and underpayment will be investigated by the state government of Victoria.

Victoria will also push for a national inquiry into what it has described as "a national shame".

Claims Australia has an underclass of foreign workers treated like "slave labour" were made by ABC TV on Monday.

The report by ABC's Four Corners Programme detailed widespread abuses of Australia's 417 visa.

The visa is for people aged 18 to 30 years of age who want a working holiday of up to 12 months in Australia.

The investigation uncovered abuses of the popular visa, including what were described as "slave-like conditions" at farms and factories across Australia.

"No employee should ever be exploited, harassed or deprived of their basic liberties", said Victoria's Minister for Industrial Relations Natalie Hutchins.

"This is not just about the underpayment of wages; this is about creating an underclass of foreign workers," said Hutchins in a statement.

Foreign underclass

"It's clear that Victoria needs a better system in place when it comes to regulating labour hire practices," she said.

The food being picked and processed by exploited workers was reportedly sold to consumers across the country by major supermarket chains and fast food outlets.

Queensland MP Keith Pitt last month called for an uncover investigation of exploitation of foreign workers in the horticultural sector.

He said many farmers were at risk of prosecution because they were using labour hire companies that underpaid backpacker workers.

Migrant workers are essential to Australia's agriculture sector, according to the National Farmers' Federation (NFF).

"Without them, there would be a chronic labour shortage at peak harvest times of the year," said NFF President Brent Finlay.

But he said all farmers had a responsibility to adopt employment practices and use labour contractors that did not exploit workers.

"And it's not just farmers, this is a whole of supply chain issue," he said.