Up to 400 military staff will lose their jobs as part of the restructuring of the Defence Force.
Defence Minister Wayne Mapp has told Parliament's foreign affairs and defence select committee on Thursday there will be job losses as about 1000 military positions are converted to civilian roles.
The first phase of the restructuring begins next Wednesday when 512 military positions get reduced to 324 civilian jobs.
Dr Mapp says just under 200 staff will be made redundant as part of the process.
Later in the year, another 500 military positions will be axed and replaced by about 300 civilian jobs, leading to roughly another 200 redundancies.
Military staff who throw away their uniforms to take the new civilian jobs will have to apply for them.
The changes are being made in an effort to save up to $500 million in the Defence Force's budget.
The Returned and Services Association says it hopes the Government keeps its promise to redirect savings from the restructure into defence force front line operations.
President Don McIver says the association is worried about declining defence force capability, and does not want to see it decline any further.
"In fact the Defence Force is doing a great deal for the country, with all of the deployments that it's undertaking overseas," Mr McIver says, "and if you put too much stress on the force itself and it's required to do those deployments, then you'll find they're less than fully capable in doing them."
He says the RSA will watch the situation carefully.