The federal government will axe the Australian Renewable Energy Agency (ARENA) in Tuesday's budget as part of its plan to drastically cut spending.

The AFR reports that ARENA is one of 50 government bodies that face the chop when Treasurer Joe Hockey delivers the budget on Tuesday night.

According to the AFR, the other bodies in the firing line include the Council of Australian Governments Reform Council and the COAG Reform Council.

The budget will cancel $1.3 billion in funding to ARENA that hasn’t already been allocated to renewable energy projects and introduce legislation to dissolve it as an independent agency. However, about $1 billion in existing contracts currently managed by ARENA will be honoured.

According to the SMH, the news was not well received by the Clean Energy Council.

“What’s disappointing here is that the Coalition really went out of its way prior to the election to restate their commitment to ARENA,” said Kane Thornton, deputy chief executive of Council.

He added that this “would send concerning signals to the renewable energy sector broadly but also to investors around the world who are making investments under ARENA, and are watching closely the outcome of the RET review.”

Citing the proposed axing of the Clean Energy Finance Corporation, possible changes to the renewable energy target, and this latest decision, ARENA chairman Greg Bourne claimed the government is showing that it doesn’t real support renewable energy.

Even so, Finance Minister Mathias Cormann denied the decision to axe ARENA or any of the 50 government bodies is driven by ideology.