Australia's national security could be put at risk by a shortfall in Commonwealth legal aid funding for cases involving serious federal crimes, including terrorism-related offences, the NSW bar has warned.

The Commonwealth and the states jointly fund Legal Aid NSW and its counterparts around the country to provide free legal help to the most disadvantaged people in criminal and other legal disputes. But successive federal governments' contributions have fallen every year since 1997 from about 50 per cent to one-third of all funding.

"Very short-sighted exercise in cost-shifting": Bar Association president Jane Needham. Credit:Kate Geraghty

In last year's Mid-Year Economic and Fiscal Outlook, the Abbott government cut $6.5 million over four years from a legal aid fund for expensive federal criminal cases, while there has been an increase in prosecutions for such offences.

Bar Association president Jane Needham, SC, said the situation was now so "dire" in NSW that a single criminal trial involving a serious Commonwealth offence that took more than 10 days to hear would "exhaust" the funds allocated by Legal Aid NSW to such cases for the current financial year.