Ethical Clothing Australia (ECA) has condemned a decision by the Federal Government to cut its funding and abandon its ethical procurement guidelines.

The ECA has said the Government cuts will "harm vulnerable homeworkers" and ethical Australian businesses in the TCF industry.

The group works with industry groups such as employers, unions and community organisations to eliminate female migrant worker exploitation in the textile, clothing and fabrics industry.

Simon McRae, national manager of the ECA said its programme is "internationally recognised as best practice in an industry in which exploitation is endemic".

He added: "Critically, the ECA accreditation programme has assisted thousands of homeworkers in the TCF industry obtain their lawful wages and conditions. Through its training and education programs, ECA has assisted hundreds of businesses understand and comply with their legal obligations."

Michele O'Neil, secretary of ECA Committee added: "This is a shocking and short-sighted decision by the Abbott government. It directly hurts some of Australia's lowest paid and most exploited workers. The government is attempting to hide the slashing of funding to this organisation behind so-called red tape. It's the opposite; it's a green light to exploitation."

The ECA said that while it will continue to support its accredited brands and "fight for a fair and ethical Australian TCF industry", the removal of ethical requirements and the loss of funding is "seriously detrimental to the sector". It is therefore calling on the Government to reverse its decision.