Prime Minister Tony Abbott says jobs will be cut from AusAID over the next three years as its operations are merged into the Department of Foreign Affairs and Trade.
Mr Abbott on Wednesday announced the aid agency would no longer operate as a stand-alone body.
He said the change was being made because development aid should be "fully integrated" into Australia's overall diplomatic effort.
"We do intend to trim the size of the commonwealth public sector by 12,000 through natural attrition over the next three years," Mr Abbott told reporters in Sydney on Thursday.
"All areas of the commonwealth public sector, other than frontline delivery agencies - security, police and the armed forces - will be subject to this.
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"Yes, there may well be fewer people working in AusAID in three years' time than is now the case."
