The legislation will give the commission power to investigate the conduct of MPs, parliamentary staff, government departments, government businesses and their employees, public servants, Tasmania Police as well as councils, councillors and council-owned companies.

As well as initiating investigations, the investigative body will have the power to compel witnesses to give evidence and put people under surveillance.

The commission will also have retrospective powers but will not be able to cover the same ground as previous investigations or court cases.

Attorney-General Lara Giddings said that the commission would have authority to oversee the way police investigate alleged Police Service code of conduct violations.

"This responds to concern that have been expressed from time to time about the undesirability of police officers investigating other police officers," Ms Giddings said.

The new commission, estimated to cost $2.5 million a year, will "triage" complaints, directing the less serious to already existing investigating agencies.

The commission will not be required to substantiate applications to the Government for extra funding to undertake an inquiry.

"We expect the commission will exercise this very unusual degree of financial independence responsibly and with due regard to public interest, including the public interest in value for money," Ms Giddings said.

The chief integrity commissioner - to be appointed by the Justice Minister - will be required to have at least seven years' experience as a lawyer and must satisfy a statutory test of political independence.

With the Opposition and Greens flagging amendments to the bill, debate was expected to go until midnight.

The debate was disrupted when acting Speaker Brenton Best ejected Greens leader Nick McKim from the chamber for 20 minutes to "cool off".

Mr McKim was kicked out after paraphrasing a newspaper article, which contained the word "lying".

Speaker Michael Polley has ruled the use of the word liar as unparliamentary.

Mr McKim initially refused to leave the chamber, the Greens noting that Premier David Bartlett had used the word lie in question time earlier in the day.