The Red Cross will shed 500 staff after the immigration department cut its asylum seeker case load.
In a leaked email to all staff, obtained by AAP, Red Cross chief executive Robert Tickner shared the "deeply disappointing" news.
"This is not the outcome that we had hoped for and we share the shock and dismay you will be feeling about this news," he said.
The email says 500 jobs will go by February because the immigration department is slashing client numbers from 12,000 to 5000 by June.
The organisation is one of seven administrating the asylum-seeker assistance scheme and community assistance support program.
The programs help asylum seekers access healthcare, counselling, accommodation, clothing and furniture, education, legal services and social support.
The Red Cross has signed a new government contract to provide services for up to four years.
Red Cross offices in South Australia, Queensland, Western Australia and the Melbourne headquarters are going to be the hardest hit by the job cuts.
Mr Tickner flagged the need for operational changes that AAP understands means asylum seekers will not be allocated a specific case worker.
Instead they will deal with rostered-on staff at a hub.
Responsibility for basic living expenses payments will move to Centrelink.
Australians Greens senator Sarah Hanson-Young said there was a danger asylum seekers could fall through the cracks because of the changes.
"The safety net was already stressed and now the government is ripping it to pieces," she said.
Comment is being sought from the immigration department.
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