Australia's powerful construction union is fighting for its survival after the prime minister flagged a pre-election industrial relations battle.

Scott Morrison is considering deregistering the Construction, Forestry, Maritime, Mining and Energy Union after voicing his disgust with a Victorian official using his children to campaign against the building industry watchdog.

CFMMEU Victorian official John Setka posted a picture of his children holding a sign saying ‘Go get f*#*ed’ with the caption “Leave our dads alone and go catch the real criminals you cowards”.

He later deleted the tweet, admitting he shouldn’t have included his kids and saying he was emotional on Father’s Day after a tough year on his family.

“I’m not gonna shy away from these issues,” Mr Morrison told reporters on Tuesday.

“This is about thugs that run unions and run Bill Shorten.”

Labor leader Mr Shorten said the attack on the CFMMEU was a distraction.

“The government is talking about the CFMEU and unions because they’ve run out of anything to talk about with everyday Australians,” Mr Shorten told reporters.

“He wants to create a fight with the CFMEU because he’s got no plans for Australians and their jobs and their healthcare, hospitals and schools.”

The union’s national construction secretary Dave Noonan said the CFMMEU would vigorously resist any attempts to deregister it.

“It’s disappointing but not surprising that a broken and divided government is resurrecting the CFMMEU bogeyman in an attempt to frighten voters,” Mr Noonan said.

He said the prime minister had nothing to say about the alleged criminal behaviour of banks, along with stagnant wages and the death toll in the construction industry.

“And now he wants to leave construction workers with no representation,” Mr Noonan said.

Trade union royal commissioner Dyson Heydon decided against deregistering the union, instead recommending new laws targeting the “fit and proper” behaviour of union officials.

Industrial Relations Minister Kelly O’Dwyer said the government would “consider all options” on the future of the union.

She called on Labor to support a bill before the Senate that would allow unions to be deregistered for widespread lawlessness.

The legislation would also see union mergers, like the CFMMEU’s amalgamation with the maritime union earlier in the year, subject to a public interest test.

By Matt Coughlan and Daniel McCulloch