The Ministry of Foreign Affairs and Trade says it will begin discussions with staff in February over proposed changes under which about 200 jobs are expected to be cut.
MFAT says the proposals are being developed and final decisions will be made by the end of March.
The ministry says it plans to improve its efficiency by forming a smaller ministry with about 200 fewer roles. It will also introduce a new business model, simpler systems and improved technology.
The Public Service Association says it is not surprised as the ministry has had a large funding cut.
National secretary Brenda Pilott says the Government signalled last year that some 200 jobs would be cut from MFAT and about 100 had gone by September.
Ms Pilott says the PSA was promised no front-line jobs would be lost, but it is no longer convinced this is the case.
Manufacturers and Exporters Association chief executive John Walley says he trusts the job losses will be backfilled by better technology and simpler systems.
Federated Farmers says while it understands the need for cost-cutting in the current economic climate, it's vital the ministry's not unduly affected.