"It is disheartening to see that the poorest people in the world will foot the bill for Australia's fiscal repairs," World Vision Australia CEO Tim Costello said following the announcement.
The federal Government also plans to freeze the aid budget for the next two years.
Mr Costello insisted that while Australia was currently in a challenging fiscal position, the burden should not fall heavily on programs which assist the world's most vulnerable, including the country's Asia-Pacific neighbours where two thirds of the world's poorest people reside.
The decision will also mean that the overseas development assistance sector will be the highest contributor to the budget repair job.
"Almost two million [Australian] households donate each year to international aid organisations, yet the Government is finding 20% of its total budget savings from the overseas aid budget," Micah Challenge's Political Engagement Coordinator Ben Thurley said.
Australian Christian Lobby director Lyle Shelton said in a statement that the Government's broken election promise came at a time when public confidence in politicians was needed more than ever.
"It would have been better if these promises had not been made in the first place", he said.
"[It is] now clear Australia's commitment to the Millennium Development Goals to increase aid as part of a global agreement to halve extreme poverty by 2015 was now all but over."
However, Mr Shelton commended the government for including funding of $115 million, announced in March, for the National Partnership Agreement on Homelessness.
He also said it was pleasing to see funding for the Australian Charities and Not For Profit Commission retained and hoped this was an indication that it may not be abolished as planned.
