The decision to reduce Ireland's aid budget by E32 million means projects for some of the poorest countries in Africa would not go ahead, aid agencies have warned.
Increases in funding would be deferred indefinitely for sub-Saharan countries such as Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia.
Reductions would also be made in contributions to the European Union and United Nations, but funding for non-government organisations such as Trócaire would not be affected.
Cuts to Ireland Aid's budget, the State body which works to develop education, health and water facilities in some of the poorest countries in the world, have attracted most controversy.
The Department of Foreign Affairs defended the move and said funding for sub-Saharan countries would be maintained and no cuts would be made.
But Concern's overseas director, Paul O'Brien, said 32m was money that could help save lives.
"It mightn't seem like a huge amount when you think about construction projects here. But when just 2,000 is enough to supply clean drinking water for 150 people, you can see how big it is," Mr O'Brien said.
Trócaire director Justin Kilcullen said failure to expand development projects placed countries at an increased risk of starvation.
"Famines don't creep up on countries. This kind of development aid is what strengthens a country's ability to survive These countries have a high mortality rate, so the longer development is delayed, the more people will die," Mr Kilcullen said.
A cut in overseas aid also means the Government would fail to meet its own interim target of spending 0.45% of GNP on aid by the end of this year.
The Department of Foreign Affairs said the Government was still committed to reaching the final target of 0.7% spending on aid by 2007.
Mr Kilcullen said he was concerned that if aid was cut again, Ireland would fall too far behind and would fail to meet the target.
"Increasingly, it is the poorest countries who are being abandoned as aid is reallocated from Africa to countries in which there is a strategic interest, such as Eastern Europe or North Africa," he said.
There have also been doubts that Ireland Aid, whose budget has increased dramatically in recent years, would have had enough staff to handle this year's funds increase.
PD junior foreign affairs minister Liz O'Donnell said that while the cut was big, it was manageable because of the rate of increase in the agency's budget.