The Federal Government has announced it will cut the foreign aid budget by more than $100 million this financial year and redirect funds to fighting poverty in the Asia-Pacific region.

Foreign Minister Julie Bishop said the total aid budget this year will be more than $5 billion - $107 million less than the year before - and will be tied to rigorous benchmarks.

Two days before the federal election, the Coalition announced it would slash the growth of the foreign aid budget to the tune of $4.5 billion over the coming four years.

Ms Bishop says it is vital Australia's foreign aid budget is "on a sustainable footing".

"The aid budget will be over $5 billion this year and hereafter it will increase year on year according to the Consumer Price Index," she said.

"We believe that this refocus of our aid budget will deliver effective outcomes.

"We are focusing on alleviating poverty, we are focusing on economic growth and empowering women and girls, better educational outcomes and better health outcomes in our region. We also want to ensure we can leverage private sector involvement."

Aid groups panned the cuts when they were first announced saying the drop in funding will force them to review a number of programs in the region.

However, Ms Bishop defended the cuts, saying the funding commitment represents an increase in aid funding.

"Under Labor's last budget they were to receive 2.5 per cent of overseas development assistance (ODA)," she said.

"Under this revised budget they will receive 2.7 per cent of ODA - that is four times what these non-Government organisations received from 2007 and 2008."

Ms Bishop said the aid budget will be focused on countries across the Indian Ocean and Asia-Pacific including investment in Indonesia, Solomon Islands, Nauru and The Philippines.

Australian aid already 'managed very rigidly and tightly'

Archie Law, the executive director of ActionAid which operates in 40 countries worldwide, said the cuts were anticipated but aid groups would like to see more detail regarding their implementation.

"But what it hasn't done until now is give a little bit more detail of where those cuts are coming from," he told ABC News 24.

"Particularly concerning is the fact that it looks like the Africa program will be cut in half. The region which has more people living in poverty per capita than anywhere else in the world will receive half the assistance from Australia when they receive pretty little in the first place."

Mr Law agreed there needed to be a healthy level of accountability overseeing how Australian aid money is spent, but said current checks and balances were adequate.

"I would argue the Australian aid program is managed very rigidly and tightly," he said.

The Australian Government will focus foreign aid funding towards countries in the Asia-Pacific region. ( AAP: Department of Defence )

"For example, the amount of reporting that we have to do now as an NGO on Australian aid money from the Government, to what we had to do when I got into this business 20 years ago, has tripled.

"It's inherently complicated when you are working in a development situation. Things are fluid. You need room to move within a framework."

Australian Council for International Development vice-president Julia Newton-Howes hopes the Government is as good as its word.

"If the Government's commitment [is] to focus on our region, well, it's understandable, it's important," Ms Newton-Howe, who is also the head of CARE Australia, said.

"We agree that there's a need to have a focus of the aid program and the most important thing for effectiveness is to have predictability.

"To have a predictable, consistent set of programs in Africa, in areas of high need, will be important if the Government is to meet its objective of reducing global poverty."

Oxfam Australia's chief executive Helen Szoke says it will be forced to scale back a number of its programs as a result of the cuts.

"We, like many other agencies, will have to tell partners and people on the ground that we'll have to scale back programs," Dr Szoke said.

"What's unclear from this announcement is what will happen to existing programs, what will happen to existing commitments, and what will happen to existing relationships with people in some of the poorest parts of the world."

However, Ms Bishop says Oxfam is judging the government's announcement against the Labor government's promises "rather than what was delivered in the 2012-2013 budget".

"This is an ideal opportunity for organisations such as Oxfam to work with the Government to develop rigorous benchmarks," she said.

"We will direct funding to the high-performing organisations that deliver the best and most effective outcomes for the people most in need."

Government breaking election promise: Wong

Labor's acting foreign affairs spokesperson Penny Wong says the cut represents a broken election promise.

"One of the things that Joe Hockey [and] Andrew Robb promised before the election is when they cut foreign aid they weren't going to take money from organisations like CARE Australia...Save the Children, organisations like Caritas and many others.

"Well, that's another broken promise from Tony Abbott because that's what they've done."

She says the Government's claim that the program is wasteful was just an attempt to justify the cut.

"There are many children around the world who live in extraordinary poverty.

"If you can look at me and say that that's something that we should all turn a blind eye to, I don't agree with you."