Labor has agreed to cut $500m from the Australian Renewable Energy Agency, allowing the passage of $6.3bn of savings in the Coalition’s “omnibus” savings bill.

That will leave $800m for the agency to continue offering grants over the next five years, down from the $1.3bn it has.

The “omnibus” savings bill was introduced by the Coalition, combining all of the savings measures both Labor and the Coalition agreed to before the election, although Labor had disputed how accurately it reflected some of their positions.

The compromise was met with disappointment by some in the pro-renewables sector.

The national director of Solar Citizens, Claire O’Rourke, said: “While we are disappointed that the ALP did not do more to stop this ideological attack by the federal Coalition, ultimately responsibility falls squarely on the shoulders of prime minister Malcolm Turnbull and the federal government.”

WWF said that, following the cut in 2014 of $435m to the agency, the new cuts amount to almost $1bn.

A spokeswoman for WWF-Australia, Kellie Caught, said: “Why punish an agency that is making a difference? Just last week Arena’s announcement on big solar showed its worth. Every dollar Arena is spending on these projects is expected to generate $10 in return.”

The Australian Youth Climate Coalition’s national director, Kirsty Albion, said: “Bill Shorten had the opportunity to stop all cuts to renewable energy. We’re disappointed that Labor will let Malcolm Turnbull cut approximately $500m from renewables.”

The Greens’ climate and energy spokesman, Adam Bandt, said Labor’s deal showed them to be “clean energy charlatans”.

“Labor had absolutely no reason to cut half a billion dollars out of Arena,” Bandt said. “If Bill Shorten had joined with the Greens and the crossbench, we could have stared the Coalition down and found fairer places to raise revenue.”

Bandt said he would move an amendment to restore Arena’s funding.