A remote village in the Solomon Islands has slaughtered at least 700 dolphins, saying it is in retaliation for a breached agreement with a conservation group.

The village of Fanalei in South Malaita, caught and killed the animals in protest over non-payment of funds promised by the Earth Island Institute to forego their traditional hunting practice.

The chairman of Fanalei Honiara-based association, Atkin Fakaia, has defended the slaughter, saying the villagers resumed their normal dolphin hunt to earn an income.

"The village says the slaughter was held because the conservation group has breached a memorandum of understanding which facilitated it providing money for project development," he said.

"(The agreement) ensured it and other villages have not held their traditional hunt for the past two years."

But the Earth Island Institute's director Lawrence Makili disputes the claim, saying the money has been provided to village representatives, who cannot account for how it was spent.

"The communities used that for an excuse for them to do what they were doing," Mr Makili said.

Last year the Solomon Islands banned the live export of dolphins.