Some sexual abuse counsellors say they will stop doing ACC-funded work rather than label abuse victims as suffering from a mental illness.
ACC has issued a revised version of a controversial proposal to tighten controls over sexual abuse claims, which are now running at 550 a month.
But Dr Kim McGregor, who chairs the tauiwi (Pakeha) section of the National Network Ending Sexual Violence Together, said counsellors were angry that the new version still required diagnosing abuse survivors with a mental disorder from the American Diagnostic and Statistical Manual DSM-IV.
"Some counsellors are ethically opposed to using a psychiatric diagnosis for sexual violence," she said.
"If you have a DSM-IV diagnosis, for example for depression, and you go for a mortgage, and they say, 'Have you ever had a mental illness?' you have to declare that. If you go for a job interview and you're asked, you have to disclose that."
ACC said last month that it wanted to bring in clinical psychologists to give second opinions based on three one-hour sessions with all sexual abuse claimants after just one session with a private counsellor.
The agency's senior clinical adviser, Dr Peter Jansen, told counsellors in an update last Friday that this proposal would be dropped - but only if the counsellors submitted a DSM-IV diagnosis.
"If sufficient information is given to us ... along with other related information and the DSM-IV diagnosis, it will be possible for the claims decision to be made without an initial independent assessment."
But he added: "ACC's legislative role is clearly defined. We are only able to assist those who have a diagnosed significant mental injury resulting from the abuse/assault they've suffered."
The proposed new rules say the counsellor making the DSM-IV diagnosis "needs to affirm that they have the relevant training and/or qualifications to make this assessment".
Dr McGregor said most counsellors did not have those qualifications and the DSM-IV diagnosis had never been required before.
"Previously it was optional. Now there's an insistence upon it."
She said the new procedure would alsoallow ACC to check with sexual abuse victims' doctors and employers to assess whether their mental condition could be traced directly to the abuse.
"They will be very likely to find some pre-existing condition or other contributing factors such as stress at work, not getting on with a partner or depression, and will therefore conclude that there is not a clear clinical link between the rape and the mental injury," she said.
ACC has invited counsellors to a workshop on its revised proposals on September 30. It has postponed implementing the new procedures from September 14 to October 12.