The Red Cross says 500 jobs will be lost after the Immigration Department slashed funding for the charity's asylum seeker support service.

The charity has confirmed 500 of 800 staff working in its migrant support programs around the country will lose their jobs over the next 10 months.

Australian Red Cross chief executive Robert Tickner said he was "deeply saddened and disappointed" by the decision.

"The [result of the] introduction of a new service model to respond to the department's new requirements will be a loss of many skilled and caring staff," he said.

A spokesperson for Immigration Minister Scott Morrison said in a statement, the Government had put in place a new team of service providers to get better value for money.

"Some [illegal maritime arrivals] IMA's have been allocated to new service providers which has meant a change to the allocation to the Red Cross," the statement said.

"Above and beyond the Government is spending $2.5 billion less because we are stopping the boats."

Since 1992 the Red Cross has assisted thousands of asylum seekers released from detention into the community.

Currently about 12,000 people - mostly families with children - rely on the charity to access financial assistance, healthcare, protection visa, and health and character checks.

The Department of Immigration and Border Protection's revised Status Resolution Support Services will see the number of clients supported by the Red Cross reduced to 5,000 by June 2015.

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