Immigration Minister Scott Morrison says he axed funding for a refugee organisation just two weeks after guaranteeing it in the budget because he believes taxes should not be propping up advocacy groups.

The Refugee Council says Mr Morrison's decision to cut $140,000 in yearly funding is "petty and vindictive". The budget put aside the money for the organisation over the next four years.

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"It's not my view, it's not the Government's view, that taxpayer funding should be there to support what is effectively an advocacy group," Mr Morrison said.

"They're entitled to be an advocacy group; they do very good work in the community and the Government will continue to support that organisation for contracted services.

"But in terms of administrative funding for an advocacy group, in a tough budget like this, frankly I just formed the view that taxpayer funds were not going to be spent on those types of activities."

He says when the matter was brought to his attention over the past fortnight, he decided the spending was "not consistent with what we are doing in this budget".

"And I took the decision to return the funding arrangements to those that were in place under the Howard government," he said.

Sorry, this video has expired Refugee Council CEO Paul Power speaks to ABC News 24

Refugee Council spokesman Paul Power says the Department of Immigration called on Thursday to inform them of Mr Morrison's decision to terminate the funding.

"A lot of people are telling us that they see it as petty and potentially vindictive towards an organisation that can often be critical of government," he said.

"It's a very small amount of money that the [Government] is saving, and also the money was allocated in the budget.

"It's really indicative of the current Government's attitude to non-government organisations that are working with refugees and asylum seekers."

Cuts an ideological attack: Greens

The Government's political critics are attacking the decision as nasty and an attempt to stifle dissent.

Opposition Leader Bill Shorten says the Government has some "hard explaining" to do.

"This Government wants to cut off its critics," he said. "This is a Government who will punish its critics."

Greens immigration spokeswoman Sarah Hanson-Young says it is a nasty decision and says the Government is trying to "silence dissent".

"These cuts are nothing more than an ideological attack to shut down the views of those who perhaps don't always align with the Government," she said.

The Refugee Council is 33 years old and serves as the national umbrella body for 180 organisations that deal with refugees and asylum seekers.

The federal funding it receives makes up a quarter of its budget, with 43 per cent coming from donations and membership fees.

The council says it will have to "redouble" its fundraising efforts as a result of the Government's change of heart on its core funding.