More than 100 environment groups face being struck off a register that gives them tax deductibility status enjoyed by charities and research organisations.

A parliamentary inquiry into the Register of Environmental Organisations has begun taking submissions, with some Government MPs agitating for a cull of the 600-strong register.

Queensland LNP senator Matthew Canavan said a preliminary audit showed eco-charities were getting tax deductibility status to engage in political rather than environmental activity.

"We've got 100 to 150 groups that seem to have their purpose at stopping industrial development, not just mining, some of those developments include tourism developments or agricultural developments but engaging in what I would view as a political debate, not the environmental debate," Senator Canavan said.

He said there had been a spike in groups campaigning against coal mining, and locals in his state were concerned jobs were being lost.

"There are a large minority who are clearly engaged primarily in trying to stop fossil fuel development in Australia and I don't think it's right that Australian taxpayers, including people who work in the mining industry, are asked to fund those activities," he said.

Many Government MPs would like the list to include only groups that do practical environment work.

Committee chair Alex Hawke believes a tightening is likely.

"I think there will be some evidence to say, and we'll see what it does say, that we should tighten the definition of a charity for environmental groups," Mr Hawke said.

Cam Walker from Friends of the Earth believes that protesting and lobbying is important environmental work.

"I think the Australian people are very sharp, they realise that protecting the environment isn't just a case of planting some trees," Mr Walker said.

"They realise that in the current context it's political activity that brings about change."

Government accused of being driven by ideology

Friends of the Earth has already come under Government scrutiny.

In the run-up to the last election it received a $130,000 donation which was spent on market research and used in conjunction with GetUp! for political campaigning.

It is currently being audited by the Australian Tax Office, but has been cleared in a separate Environment Department investigation.

Senator Canavan says there has been a spike in groups campaigning against coal mining. ( ABC News )

"I wish we hadn't taken this money, and that's simply because we have in Canberra enough people that are in control of Government that are fiercely anti-environment, and very ideologically so," Mr Walker said.

The inquiry will also scrutinise auspicing arrangements, where groups with tax deductibility status collect for those that do not have it.

"Often you look at some of these groups which have been around for a long time, but they're linked to affiliates that I know in northern Tasmania have been involved in illegal activities, illegal protest activities, trying to run down legitimate businesses in northern Tasmania" said Liberal MP Andrew Nikolic, who has led the push for the inquiry.

Mr Walker from Friends of the Earth said audits had shown auspicing was legal under the act.

Inquiry 'more about politics than facts'

Environment NGOs said funding had already been cut for environmental campaigns and lawyers, and the latest move was part of a campaign against the sector.

"The current House of Representatives inquiry is an attempt to silence the environment movement. We have no doubt that this is more about politics than about facts," Mr Walker said.

Cam Walker says audits have shown auspicing was legal under the act. ( ABC News )

Other groups like the Institute of Public Affairs (IPA), which campaigns on behalf of big business to remove environmental protections, also have tax deductibility status.

NGO academic and vice-president of Environment Victoria, Joan Staples, said that was hypocritical.

"The department that scrutinises them, which is not the Environment Department but the Industry Department, should be scrutinising them much more closely and look at whether they really are producing what that tax deductibility status requires of them," she said.

The IPA declined to be interviewed but said not all money raised was tax deductible.