Federal Treasurer Joe Hockey has announced another massive cut to the foreign aid budget, confirming $3.7 billion would be slashed from aid over the next four years - the single largest source of savings unveiled in Monday's mid-year budget update.

It's a double whammy for the aid sector, which suffered a $7.6 billion blow in the federal budget a little over six months ago.

They were bracing for another hit this time around - but nothing on this scale.

"What we're seeing is acts of vandalism now," ActionAid executive director Archie Law told AAP.

The aid budget will now only increase with inflation and extra cash will not be made available until the nation's finances are back in the black.

Critics claim this will plunge aid spending back to Howard-era levels and equate to just 0.2 per cent of national income.

"This is the lowest ever level since records began in 1954 - when Queen Elizabeth II first visited Australia," Australian Council for International Development CEO Marc Purcell said in a statement.

CARE Australia boss Julia Newton-Howes said it was unacceptable a wealthy global citizen that chaired the G20 and the UN Security Council could ignore its obligations to those in need.

"We can't turn our back on problems like Ebola, on problems like global poverty, because if you ignore those problems they'll bite much harder," she told AAP.

Mr Hockey said the savings would offset $1.3 billion in new spending on national security, including $630 million to combat homegrown terrorism.

The government had worked hard to ensure the savings had no impact on the Australian economy, he said.

Australia gives billions, but comparatively little

Australia gave close to $5 billion in official development assistance (foreign aid) in 2013, according to OECD data.

The nation's spending peaked in 2012 with $5.4 billion, after close to $5 billion the previous year.

However, Australia's spending compared to gross national income (GNI) was not high compared to many other OECD nations.