A Palmerston North research institution is reeling from the news it has missed out on millions of dollars in government funding while another prepares for the next phase to secure a slice of the cash.

The Allan Wilson Centre for Molecular Ecology and Evolution, based at Massey University's Manawatu campus, has been left off the Tertiary Education Commission's latest list for renewal as a Centre of Research Excellence (CoRE).

However the Riddet Institute, also based in Palmerston North, has made the shortlist of four vying for three available places.

CoRE funding is designed to bring together leading scientists across institutions to deliver strategically focused research.

In the latest round 13 applicants made a bid to be one of the centres to receive on average $35 million annually in operating expenditure up until 2020.

The Allan Wilson Centre missed out and from December funds would dry up.

"It's certainly not good news," director Professor Hamish Spencer said.

"It means the things the centre has been doing will shift and change quite dramatically, because we simply won't have the resources to do that kind of work any more."

The Allan Wilson Centre is a scientific network of more than 100 researchers sourced from five universities and two Crown research institutes that study the evolution of humans, animals, plants and disease.

"It's going to impact on the science being done around various aspects of the biodiversity of New Zealand, from mathematical investigations right through to molecular genetics," Spencer said.

"It will also curtail our community outreach . . . and although it doesn't necessarily mean it's the end, it is hard to do things without resources.

"The international excellence of the science was undisputed, the quality of our outreach was streets ahead and we're really disappointed, because [we thought] the centre has been doing exactly what was required."

The centre has had two CoRE funding terms since 2003 and received about $4.5m a year, which was its main source of income.

Spencer said the search for alternative funding sources would start soon but the centre would struggle to do the same work again.

For the Riddet Institute, making the shortlist was good news.

"We're delighted and the fact we have been shortlisted demonstrates our excellence and our key role for innovating New Zealand's agri-food economy," co-director Distinguished Professor Paul Moughan said.

"The Riddet Institute is critical for New Zealand's food industry and therefore the New Zealand economy . . . and it's also important for the local district.

"Our aim now is to put our best foot forward and to secure the ongoing funding . . . so it's fingers crossed."

The Riddet Institute became a CoRE in 2007, but missed out on having the funding renewed last year, but then in the Budget CoRE funding was boosted by $53m over four years, which allowed a further three CoREs to be funded from 2016.

As part of the next stage of the assessment process Riddet will host a site visit next month and the decision will be made in May.