The fund was used to challenge the Three Kings housing development, pictured, in Auckland.

The Government have quietly changed the rules around an environmental legal assistance fund to render it basically useless, critics say.

The Environmental Legal Assistance (ELA) fund is a contestable pool of cash that organisations can apply to use in order to legally challenge developments on environmental grounds under the Resource Management Act.

It helps those groups fund the cost of lawyers and expert witnesses in Environment Court cases and Board of Inquiry hearings for "matters of national significance".

ALDEN WILLIAMS/FAIRFAX NZ Nick Smith is both Environment Minister and Building and Construction Minister. He says the changes are necessary and will not take the fund's teeth away.

The money has been used to legally challenge the Basin Reserve flyover in Wellington, the Three Kings Housing development in Auckland, and the Ruataniwha Dam in Hawke's Bay.

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A new criteria, added on Friday with no press release, requires the panel who consider applications to to take into account whether granting the money will "contribute to impeding or delaying the ability of people and communities to provide for their social, economic and cultural well-being in relation to important needs, including employment, housing and infrastructure."

MAARTEN HOLL/ FAIRFAX NZ The Save the Basin group, who stopped the Basin Reserve flyover in Wellington, say the fund greatly improved their legal standing.

Critics say this change will render the fund useless.

"Developers could claim almost any development is in the public interest. A coal mine creates jobs," Save the Basin spokesman Tim Jones said.

His group used the fund to successfully stop the New Zealand Transport Agency's (NZTA) proposed Basin Reserve flyover in Wellington.

Dean Kozanic Green MP Eugenie Sage: "National halved the fund and now they are trying to further strangle environmental opposition."

Jones said the fund made a "huge difference" in their financial ability to fight the case.

"This sounds very much like it was designed to stop groups like us getting funding," Jones said.

"It's not just about getting to hire lawyers - it's a fundamental part of the legal process, that communities should have the right to challenge proposals."

Jones said this was the latest change in an ongoing "death by a thousand cuts" campaign against the fund.

The ELA annual budget was slashed to $600,000 in 2013, down $445,000 on the year before - although the Government noted that the full amount had rarely been allocated.

In 2016 Environment Minister Nick Smith took over final control of funding decisions from the chief executive of the Ministry for the Environment, a move critics described as a "power grab".

The fund was set up by the Labour government in 2001 as part of a deal with the Green Party.

Green MP Eugenie Sage said the Government was trying to shut down any opposition to controversial developments.

"This is a deliberate political intervention to prevent NGOs [non-governmental organisations] from being involved in controversial cases," Sage said.

"There are already quite tight criteria to make sure that the cases that do get funding are soundly based and raise important issues of environmental law."

"National halved the fund and now they are trying to further strangle environmental opposition."

She described it as a "vindictive" move after a residents' group delayed the Three Kings Housing development in Auckland.

Smith said it was not a direct response to issues with the Three Kings development, but that community groups challenging new housing and infrastructure projects was a factor.

"I make no apologies about being frustrated that the Three Kings project - which involved 3500 homes - was effectively delayed for five years as a result of multiple challenges to the High Court and Environmental Court," Smith said.

Smith is both the Environment Minister and the Minister for Building and Construction.

"The Government doesn't want to spending taxpayer money to impede new housing on one hand, while the other hand is trying to get more houses and transport infrastructure built."

He said the new criteria wouldn't take the fund's teeth away or mean that no challenges to housing projects would be financed - it just meant that the panel would have to consider the impact on new housing or infrastructure when making decisions.

"It just gives a signal to the panel that they need to consider, alongside the environmental considerations, the impact on housing and transport," Smith said.

"There's always a judgement call for to determine where there is just a bunch of NIMBYs and where is there an important environmental issue that needs to be resourced and tested in court."