The Defence Force has cut allowances for personnel being sent overseas on non-operational posts such as support and advisory roles.
Defence Minister Jonathan Coleman said the cuts will save $5.6 million a year.
They are part of the Defence Force's target to save $350 -$400 million by 2015.
"It brings the allowance regime into line with what's reasonable for people overseas in non-operational posts," Dr Coleman said.
There are 157 people are posted overseas in non-operational roles which support front line military operations, including defence advisers and personnel attached to embassies overseas.
Half of those on overseas postings will return during the year and their replacements will be on the new reduced allowance, while the remainder will stay on the current allowance for a year.
Allowances for defence personnel on operational deployments like the Provincial Reconstruction Team in Bamyan, in Afghanistan, will not be cut.
Labour Party defence spokesperson Iain Lees-Galloway says the cuts continue an erosion of pay and conditions for personnel and he is concerned they will lead to morale falling further.
Dr Coleman says personnel were consulted on the new allowances.