Citing an unnamed source, the newspaper says a senior government official has confirmed the job cuts could reach 800 if the federal government imposes further budget reductions on the department.
About 2,200 people work for the department.
Earlier this month, Veterans Affairs Canada confirmed plans to cut more than $226 million from its budget in the next two years — but there were no job numbers attached.
The department says the cuts are the result of the dwindling number of Second World War and Korean War veterans — a decision the veterans ombudsman says makes no sense.
Yvan Thauvette, national president for the Union of Veterans Affairs Employees, says employees were told about the possibility of 500 positions being eliminated — but they know there could be more reductions.
Codie Taylor, spokeswoman for Veterans Affairs Minister Steven Blaney, issued a email stressing that there will be no cuts to benefits for veterans.
"Our government has always delivered for our veterans and we will continue to do so by providing them with the care and support they need when they need it," she said.
"Changes at the Department of Veterans Affairs are focused on improving efficiency, cutting unnecessary red tape and improving service delivery."