Forest & Bird says the Government urgently needs to fund wallaby control, before the pest reaches plague proportions.
Wallabies could spread over a third of New Zealand within the next 50 years, unless control is increased dramatically, said Forest & Bird central North Island regional manager Rebecca Stirnemann.
Wallabies eat native trees and plants in the undergrowth of forests and compete with native wildlife for food.
They also damage tall tussock grasslands, leaving bare ground and increasing soil erosion.
"They are like giant rabbits that eat their way through native bush, reducing the species of plants and trees by 57 per cent. They pose an enormous threat economically and environmentally," said Stirnemann.
Populations of dama wallabies in the Rotorua lakes region are dangerously high and threatening new areas, she said.
"They pose a terrible risk to native forests in Te Urewera and the Kaimai ranges, which they are edging closer to as they expand in numbers.
"If they get established in those beautiful, mature forests, the consequences would be disastrous," Stirnemann said.
People have reported seeing 20 to 30 wallabies a night around the Rotorua lakes.
The small, grey dama wallabies can move long distances quickly and have just started spreading into Waikato for the first time, said Stirnemann.
Forest & Bird Canterbury regional manager Nicky Snoyink said wallabies also pose a serious threat to Aoraki Mount Cook and the fragile Mackenzie Basin.
Hundreds of thousands of Bennett's wallabies are believed to live within the South Canterbury containment area, which is bordered by the Waitaki River, Lake Tekapo and the Rangitata River.
They are quickly spreading from the 900,000 hectare containment area into the mountains, where they eat rare native plants and mushrooms.
"Wallabies are spreading into the upper Waitaki and Mackenzie Basin. They're grazers, so they pose a serious threat to rare alpine plants. Once established in alpine areas, they will be difficult to eradicate," said Snoyink.
The Bennett's wallaby weighs up to 18kg and eats six times more than a rabbit.
The Government provided funding for wallaby control in South Canterbury until 1992, when farmers in the containment area were handed responsibility for controlling the pests.
Since then, wallaby numbers in the south have escalated.
Stirnemann said farms and forestry will also suffer if wallaby populations explode, because they eat large amounts of pasture grass and young pine trees.
Wallabies have already been sighted in fresh territories in Auckland, Northland, Hawke's Bay, Gisborne, Wellington, Marlborough, Southland, and the West Coast.
If wallabies are allowed to spread without further control, the Ministry for Primary Industries estimated that in 10 years they will cost $84 million per year in economic losses.
The current annual impact of wallabies is $28 million.
Effective control would cost about $7.4 million a year for 10 years, said Stirnemann.
In 2017 to 2018 only about $1.38 million was spent on wallaby control by local and central government and private landowners, she said.
"It's shocking that we're not putting more funding into dealing with this plague of wallabies that's moving across both the North and South islands," said Stirnemann.
The two species of wallabies, dama and Bennett's, were introduced to New Zealand from Australia, in much the same way as possums.