An axe hangs over 305 jobs - including 63 policy positions - at the Ministry of Foreign Affairs and Trade.
The announcement was made by MFAT chief executive John Allen at a press conference today, who stressed that the reforms were a proposal and "not a done deal", and staff had a month to provide feedback.
Labour's foreign affairs spokesperson Phil Goff leaked the numbers before this afternoon's press conference, saying that a loss of a quarter of the ministry's positions would undermine its ability to perform its core diplomatic functions.
Mr Allen confirmed the proposal was to have fewer diplomats and fewer policy staff, including 169 fewer ministry staff in New Zealand and overseas, and 136 positions for locally-engaged staff, including Human Resources, Information Technology and property-management.
About 600 staff would have to reapply for jobs.
The proposals include a "hubbed" approach to diplomacy in Europe, with two diplomats based in Brussels and Berlin, rather than one in every capital.
Embassies in Warsaw and Stockholm are being considered for closure.
The Maori Policy Unit would be cut under the proposals.
Among other proposed changes was to boost Wellington salaries and cut overseas allowances, including the 20 per cent increase for a partner and the 7 per cent increase for each child.
Mr Allen said a 24-hour consular hotline could make the ministry more efficient.
A final decision on the proposals, which are expected to save between $20m and $25m a year, is due on April 10.