The Textile, Clothing and Footwear Union of Australia (TCFUA) has accused the Federal Government of undercutting workers in the sector.
The TCFUA has claimed some $7 million worth of support for redundant workers in the sector seeking alternative employment has been slashed.
It is claimed the decision was made as part of the Government's Mid Year Economic Statement.
In it, financial assistance allocated under the TCF Structural Adjustment Program has been almost halved over the next three years.
The first cut of $2.3 million is projected to hit in 2012/13, the union said in a statement.
TCFUA national secretary Michele O'Neil said the funding had been cut to partially offset the cost of providing assistance to Australian Paper's Maryvale Pulp and Paper Mill to establish a de-inked pulp facility.
"This is a shocking, ill thought decision. It is a classic case of robbing Peter to pay Paul. Textile and clothing workers are some of the most vulnerable workers in Australia, who have borne the brunt of decades long economic restructuring and dislocation.
"We support the need to assist struggling industries and their local communities, but are appalled at this budgetary sleight of hand which essentially trades off one group of low paid workers against another.’
O'Neil said the program has been critical in providing sector workers find alternative employment in a very tough manufacturing environment.
A recent report produced for the Prime Minister’s Manufacturing Taskforce identified that DEEWR projected a 25 per cent reduction of jobs in the industry over the next five years.