The Australian Christian Lobby has said it hopes a report suggesting money would be redirected from foreign aid to fighting terrorism in tomorrow's Federal Budget with managing director Lyle Shelton saying such a move would "constitute a breach of Australia’s commitment to meet the Millennium Development Goals to tackle global poverty".

The Australian newspaper has reported that foreign aid funds will be used to boost the budgets of Australia's foreign spy agency, the Australian Secret Intelligence Service, the domestic spy agency, ASIO, and the Australian Federal Police in tomorrow's budget.

Mr Shelton said in a statement that it would be "disappointing" if the Australian Government was considering "shrinking our foreign aid commitment even further, given we already are giving below what we had committed to the international community". 

"Counter-terrorism measures are obviously vital but they should not be funded by taking money away from programs to help people in extreme poverty," he said. "The aid budget should not become a soft touch to fund other programs."

The news - which the Prime Minister Malcolm Turnbull has refused to confirm - has also alarmed aid agencies with World Vision Australia warning that continuing cuts to Australian aid will only further undermine impoverished communities.

“It’s not smart to fight terrorism by cutting aid,” Tim Costello, the organisation's chief advocate, said.

Rev Costello said one the best ways to fight terrorism to to deploy aid to build resilience in Australia's region.

“Australia’s aid investments are good for Australia’s security as they play an essential role in supporting peace, stability and prosperity,” he said. “It makes no sense at all to cut aid and undermine long-term efforts to build stability and resilience at a time when the world needs our support more than ever.”

The Coalition Government has already cut $11.3 billion from foreign aid.