The Abbott government's decision to shutter a 50-year-old Mount Macedon-based emergency management training campus is a ''significant blow'' to public sector disaster response, according to Labor.

The federal government will, by mid-2015, ''transition'' the Australian Emergency Management Institute into a Canberra-based virtual institute, in a move flagged in the budget papers, saving Australian taxpayers about $900,000.

The 44 employees are being asked to relocate or take a redundancy package.

Shadow attorney-general Mark Dreyfus said that for emergency services workers and efforts, the closure was a significant blow.

There will be a serious loss to the emergency management community when the short residential courses are replaced by an online service from Canberra, he said.