Public sector bosses have been asked to identify potential savings of up to 10% as part of the Government's line-by-line review of expenditure.
The figure is included in the Treasury's guidelines prepared for chief executives as part of the 2009 Budget process.
The guidelines, attached to a letter to chief executives from Finance Minister Bill English, state that chief executives should use their detailed knowledge of their department and sector to "identify spending that delivers the lowest value for money - say the bottom 5% and 10%."
The Government has always resisted setting a target for the expenditure review, and the guidelines do not say savings of that size will necessarily follow.
But the 5% to 10% figure gives some indication of the scope of the review.
The guidelines also ask chief executives to consider the growth in the size of their departments in recent years.
The Labour Party says the guidelines make it clear the Government does have a target, and the cuts will significantly reduce public services.
Labour's state services spokesperson Grant Robertson says the Government has been misleading the public over its plans for the public sector and it has a long-term agenda of cutting back on public services.
The Public Service Association says jobs are already disappearing and that is cutting into muscle - not fat.
However, Prime Minister John Key says there is no target, and while some departments may find savings of 5% or 10%, others will not find any at all.
Mr Key says there is some fat in the system and the Government has been upfront about its desire to eliminate low value programmes.
He says it is too early to say what sort of overall savings will be identified through the expenditure review.
Finance Minister Bill English also dismissed claims the Government is looking for public service cuts of up to 10%, saying there is no way spending reductions will be that big.
