Foreign Affairs Minister Murray McCully has been accused of acting vindictively towards overseas aid agencies which criticised his changes to the direction of the aid programme earlier this year.

Labour's associate foreign affairs spokesman, Phil Twyford, said funding had been cut to the Council for International Development (CID), an umbrella organisation of aid groups, by $650,000 over the next two years.

However, Mr McCully's spokesman said Mr Twyford was not correct. No final decisions about the funding had been taken and the figures quoted were indicative at this stage.

There were to be further talks with CID where it could put a case for more funding, he said.

The council's 94 members include aid agencies such as World Vision, Oxfam, Save the Children, Child Fund, Tear Fund, and Volunteer Service Abroad.

"The aid agencies publicly criticised the minister's ill-advised plans to change the direction of Government policy on development aid earlier this year," Mr Twyford said.

"This is how Mr McCully responds. It is another example of bullying from a Government that cannot handle public criticism."

CID has been funded through the aid programme to the tune of $900,000 a year but will drop to $650,000 this year and to $500,000 the next.

Mr Twyford said he expected the minister to say that he wanted to spend the money overseas instead of in New Zealand.

"The funding of CID is a tiny fraction of the $32 million NZAID spends each year on aid delivered by NGOs.

"It builds the professional and administrative capacity of the NGOs so they can be more accountable for taxpayer funds."

The cuts threatened to undermine the NGOs' efforts to be more effective and accountable, Mr Twyford said.

Funding to another group, the Development Resource Centre, which provides educational resources on humanitarian issues, had also been cut by $300,000 over two years.

- NZPA