The Federal Government has cancelled its plan to cut millions of dollars in funding for community legal centres across Australia after backlash from the sector.

Centres had been bracing for a 30 per cent slash in funding from July 1, working out at nearly $35 million over three years, but today Attorney-General George Brandis announced he’d return funding and go further.

“This is new money, it is not being removed or taken away or transferred from other priorities of the government,” the Attorney-General said.

“It represents the largest single commitment on an annualised basis by the Commonwealth Government to the legal assistance sector ever.”

The sector will receive a funding boost of $55.7 million over the next three years, which includes $16.7 million for Indigenous legal services.

Senator Brandis has blamed the funding shortfall on the previous Labor Government’s 2014 budget, however the Coalition also made savings during its time in office.

“We are announcing this in advance of the Budget because we want to send a clear signal about where the Government's priorities lie,” he said.

Acting Shadow Attorney-General Katy Gallagher welcomed the increase in funding but said it was a humiliating change of heart from Senator Brandis.

“Yet he still continues to deny any responsibility for the uncertainty and the devastating impact that these potential cuts have caused,” Senator Gallagher said.

Watch: Brandis announces funding for CLCs

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The U-turn is a relief for many centres, with the Law Council of Australia calling it a “tremendous victory” for access to justice.

“The scheduled budget cuts would have significantly deepened the funding crisis affecting the legal assistance sector, with enormous downstream costs to taxpayers,” Law Council President Fiona McLeod said.

“Those who work in the legal assistance sector are the unsung heroes of our community, working long hours in extremely challenging conditions to achieve justice for their clients.”

Ms McLeod said many centres had been factoring in the cut, which was to take place in eight weeks, by slashing services or staff.

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In 2014 the Productivity Commission determined the community legal sector was underfunded, and needed a $200m injection of funding.

It highlighted the spending would be offset by savings for taxpayers by reducing costs and demand for the courts.

Today's announcement takes funding for the services to 2020, when a national partnership agreement with the states and territories ends.

All jurisdictions will have to negotiate a new funding deal from that point.