The Federal Government has come under fire from both unions and academics over its decision to reduce funding to the Department of Foreign Affairs and Trade (DFAT).

The Government has announced nearly $90 million will be cut from DFAT over the next four years by withdrawing seven diplomats from overseas postings and scaling back accommodation costs.

Michael Tull from the Community and Public Sector Union (CPSU) says the move is the latest in a string of substantial budget cuts made to the department.

"There's no fat left to cut in DFAT," he said.

The Government says the withdrawals will be made from Australia's larger overseas posts and more locally-based positions will be created to compensate for the changes.

"It's in the national interest to have all of those posts fully staffed," Mr Tull said.

Professor William Maley from the Australian National University's Asia-Pacific College of Diplomacy agrees.

"It's going to be very difficult to accommodate cuts on this scale without it impacting on the performance of Australia in a diplomatic sense," he said.

He says it is hard to see how Australia's bid for a place on the United Nations Security Council will not be affected.