Paul Whyte, 56, and his close associate, Jacob Anthonisz, 43, are accused of raising false invoices for more than $2.5 million in payments to two shell companies.

When their corruption charges were read out in Perth Magistrates Court on Friday, it was alleged Whyte's offending started in January 2016, while Anthonisz was said to have begun two years later.

But more charges would likely follow, prosecutors revealed, saying there was evidence of further theft of $20 million to $25 million dating back to 2008, when the Liberals were in government.

Whyte has been a public servant for more than 25 years, including management roles in the Department of Housing, which became part of the Department of Communities under a dramatic public sector amalgamation undertaken by the McGowan government.

As the department's assistant director-general of corporate operations he was earning $220,000-$240,000 per year.

He was also allegedly spending stolen taxpayers' cash on racehorses and his own expenses, living in one of his two luxurious Mosman Park houses.

"If proven, these allegations are absolutely appalling and will be a complete betrayal of every West Australian," Premier Mark McGowan told reporters.

He said the Public Sector Commission-led review would examine governance, legal and administrative arrangements in the department, and recommend any necessary changes.

It would not duplicate the ongoing investigation by police and the Corruption and Crime Commission, which was operating like a royal commission, so a broader public sector review was not needed, he said.

"No stone will be left unturned in our efforts to get to the bottom of everything that has occurred here," Mr McGowan said.

Department of Communities director general Michelle Andrews, who has only been in the job for six months, said she was shocked and disappointed by the allegations.

"Clearly, further work needs to be done by all of us to build a department with a stronger culture built on integrity, honesty and service delivery and to regain public trust and confidence," she said.

Attorney-General John Quigley told 6PR radio he felt sickened for public servants, who had endured a wage freeze while the "fat cat at the top is licking the cream", and for the vulnerable people the department is supposed to serve.

Opposition leader Liza Harvey blamed the department amalgamations for causing chaos.

"There's no leadership, there's no direct line of command and that is why we have this corruption that's managed to go unchecked," she told reporters.

Australian Associated Press