The Government plans to overhaul the way aid agencies are funded to deliver aid overseas.
The move was revealed on Monday in a letter to the sector by Foreign Affairs Minister Murray McCully.
The letter says officials are designing a new fund to focus on the Pacific and South East Asia.
Mr McCully says in the letter that aid programmes are out of step with the Government's goal of driving economic development in the Pacific region.
He says time-wasting tender processes have set back the relief efforts.
The director of the Catholic aid agency Caritas, Michael Smith, says more details are needed urgently.
He says if money is cut suddenly from programmes with partner groups overseas, lives could be lost.
Mr McCully told Morning Report he is not opposed to working with non-governmental organisations (NGOs), and in fact believes more work should be done in partnership with them.
However he says changes are needed in two schemes, totalling $26 million, administered by a committee of NGOs.