Tony Abbott's Green Army will reportedly be dumped in the upcoming mid-year budget review, helping to fund a $100 million investment in Landcare as part of a backpacker tax deal with the Greens.
The army was an election promise of the former prime minister aimed at creating a force of young unemployed people to work on conservation projects.
But the Australian Financial Review reports on Monday the project will be abolished in the budget update on December 19, saving more than $350 million.
Environment Minister Josh Frydenberg would not confirm the report, describing the Green Army as a very successful program from the coalition.
"But these are issues which have to be looked at in the context of the overall budget situation," he told ABC radio.
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"I don't want to pre-empt what will happen in MYEFO other than to say we have to find savings across the board."
Labor frontbencher Michelle Rowland says the revelation exposes the backpacker tax deal with the Greens as a sham.
"We have the government also in a position where we are going to have deep divisions being exposed," she told Sky News.
"This was, I'm well aware, very popular amongst government MPs."
Prime Minister Malcolm Turnbull repeatedly refused to be drawn on the Green Army's future.
"I am not going to foreshadow what may be in MYEFO which is only a few weeks away," he told reporters in Melbourne.
Mr Turnbull insisted his government had a strong commitment to environmental programs, nominating Landcare as a very good program.
