Minister of Foreign Affairs Murray McCully is criticising his own ministry for cost-cutting measures he says he disapproves of.
The measures - unveiled a month ago in a bid to save $25 million a year - will now be revised.
One of the ministry's ideas was the outsourcing of jobs to contracting agencies.
But Mr McCully says that would not work in many places where New Zealand is represented, such as the Pacific Islands.
The minister has also confirmed an earlier Radio New Zealand report that the number of foreign affairs jobs to be cut will be roughly halved - from 300 down to 150 - and that savings will be focused on Europe, not Asia.
Mr McCully says, however, that some aspects of his ministry's proposals will remain. They include ending the system of rotating diplomats among posts and instead making them apply for advertised positions.
Further details will be unveiled when managers meet public sector unions on Thursday.
Labour says U-turn 'humiliating'
The Labour Party says the Government is performing a humiliating but necessary U-turn over its proposed changes at the Ministry of Foreign Affairs and Trade.
The plans, including job cuts and embassy closures in Stockholm and Warsaw, were announced at the end of February. Potential job cuts would have affected 169 MFAT staff in New Zealand and overseas and 136 locally-hired staff in foreign missions.
Radio New Zealand's political staff say the plan to replace local staff with contractors is likely to be dropped. Instead, the human resources and finance departments in Wellington are likely to come under pressure to cut costs.
Our political staff say instead of any reduction in funding to embassies in Asia, posts in Europe would be targeted, with possible downgrades or closures in Madrid, the Hague, Rome and Paris.
Labour's foreign affairs spokesperson Phil Goff says the original proposals would have ripped the guts out of the ministry - and Foreign Affairs Minister Murray McCully must take responsibility for that.
"No proposal of this nature would proceed, other than by close consultation at every point with the minister. The minister is responsible - but he's trying to place the blame elsewhere."
Union to meet with MFAT boss
The Public Service Association national secretary Brenda Pilott is welcoming the possibility of planned job cuts being scaled back, but the union is taking nothing for granted.
Ms Pilott says the union is meeting with MFAT chief executive John Allen on Thursday and hope to get some clarification about where things are at with the planned changes.
"We will be very glad if the reported comments are right that there is due to be a scaling back of the proposals. That will be welcome."