The Federal Government has announced it will contribute $200 million to an international fund designed to help developing nations tackle climate change.

Foreign Minister Julie Bishop announced the funding at the United Nations Climate Change Conference in Lima, Peru.

The money, which will be paid over four years from Australia's aid program, will go to the UN's Green Climate Fund (GCF), which aims to fund projects in poorer countries.

"Our pledge to the Green Climate Fund will facilitate private sector-led economic growth in our region ... with a particular focus on investment, infrastructure, energy, forestry and emissions reductions," Ms Bishop told the conference.

"I welcome the fact that participating countries have delivered on undertakings to capitalise the Green Climate fund and with Australia's contribution have reached a significant total in excess of $10 billion to date.

"It is now contingent on all of us to make sure the Green Climate Fund funds are distributed efficiently, transparently and to maximum effect."

Last month the United States announced a contribution of $US3 billion and Japan pledged $US1.5 billion ahead of a Berlin GFC conference that received commitments of up to $US9.3 billion from 21 countries, including four developing nations.

Canada also recently pledged about $US250 million.

However, Australia did not attend the conference in Berlin and had faced criticism from aid and climate change advocates for not committing to the fund.

The Government had previously indicated it would not contribute any money, but Prime Minister Tony Abbott said the situation had changed.

"We've seen things develop over the last few months," Mr Abbott said.

"I think it's now fair and reasonable for the Government to make a modest, prudent and proportionate commitment to this climate mitigation fund: I think that is something that a sensible government does."

Climate groups welcomed the announcement but said it was not enough.

The Climate Institute's Erwin Jackson said the total amount was "modest" given it "falls short of the $350 million per year [we] suggest is the minimum fair contribution to climate financing from Australia".

Aid and development organisation Oxfam said it could only be called a first step.

"Australia's pledge, just days after reports that they would not contribute to the fund, is an important message of support and a recognition of the country's responsibility to act," spokesman Ben Grossman-Cohen said.

Given the $200 million is coming out of Australia's aid funding, it is not clear whether other projects will have to be cut to pay the GCF.

Greens leader Christine Milne said that taking the money from the aid budget is "especially galling".

"This is robbing Peter to pay Paul," she said in a statement.

"The Green Climate Fund contribution should be on top of Australia's overseas aid contributions, not a substitute for it."

The Federal Government says it is committed to reducing greenhouse gas emissions by 5 per cent below 2000 levels by 2020 through its Direct Action policy.

The latest OECD Greenhouse Gas Emissions Index ranks Australia as the largest emitter of greenhouse gases per capita.