Representatives of most of the world's poor countries have walked out of increasingly fractious climate negotiations after the EU, Australia, the US and other developed countries insisted that the question of who should pay compensation for extreme climate events be discussed only after 2015.

The orchestrated move by the G77 and China bloc of 132 countries came during talks about "loss and damage" – how countries should respond to climate impacts that are difficult or impossible to adapt to, such as typhoon Haiyan.

Saleemul Huq, the scientist whose work on loss and damage helped put the issue of recompense on the conference agenda, said: "Discussions were going well in a spirit of co-operation, but at the end of the session on loss and damage Australia put everything agreed into brackets, so the whole debate went to waste."

Australia was accused of not taking the negotiations seriously. "They wore T-shirts and gorged on snacks throughout the negotiation. That gives some indication of the manner they are behaving in," said a spokeswoman for Climate Action Network.

After a three hour delay in the negotiatons,while countries debated what to do in private, talks resumed. "[The walkout] helped to clear the air. They know we are serious," said one lead negotiator, who denied developing countries were "grandstanding."

Developing countries have demanded that a new UN institution be set up to oversee compensation but rich countries have been dismissive, blocking calls for a full debate in the climate talks.

"The EU understands that the issue is incredibly important for developing countries. But they should be careful about … creating a new institution. This is not [what] this process needs," said Connie Hedegaard, EU climate commissioner.

She ruled out their most important demand, insisting: "We cannot have a system where we have automatic compensation when severe events happen around the world. That is not feasible."

The G77 and China group, which is due to give a press conference on Wednesday to explain the walkout, has made progress on loss and damage, which it says is a "red line" issue. It claims to be unified with similar blocs including the Least Developed Countries, Alliance of Small Island States and the Africa Group of negotiators.

Hedegaard poured cold water on last week's related proposal by Brazil, that the Intergovernmental Panel on Climate Change be asked to find a way to quantify each country's historical emissions of greenhouse gases in order to help countries establish the level of future emission cuts.

Debate on the issue has been rejected by rich countries, which fear it could lead to unacceptable costs.

Hedegaard conceded that rich countries had a special responsibility to cut emissions. "The whole financing discussion reflects that the developed world knows it has special responsibility. Most of what has been emitted has been done by us," she said.

Harjeet Singh, ActionAid Internatonal's spokesman on disaster risk, said: "The US, EU, Australia and Norway remain blind to the climate reality that's hitting us all, and poor people and countries much harder. They continue to derail negotiations in Warsaw that can create a new system to deal with new types of loss and damage such as sea-level rise, loss of territory, biodiversity and other non-economic losses more systematically."

Australian ambassador Justin Lee, who is heading Australia's delegation following its decision not to send a minister to the talks, rejected criticism the country had been obstructive during negotiations, in particular related to possible financial commitments.

"Australia is engaging in negotiations constructively," Lee said. "Australia wants progress on negotiation of an agreement that sets up effective global action based on broad participation. Major economies and Australia's key trading partners will need to participate and Australia will move in step with them, protecting our competitiveness."