The Charities Commission will be scrapped under legislation passed by Parliament last night.
The Crown Entities Reform Bill would instead see the regulation of charities carried out by a board within the Department of Internal Affairs.
Opposition MPs were set to attempt to stop the axing of the watchdog with an amendment to the legislation tonight when it goes through committee stages.
Labour MP Trevor Mallard drafted the amendment and told Parliament: ''We think that the charities-related functions will be much less accessible to the public and that the charity sector work will carried out in a much less transparent manner if these functions become just another part of the grab bag that is the Department of Internal Affairs.''
The amendment would introduce a three year gap after the legislation passes to allow the government to reconsider axing the Commission.
Community groups have called on United Future leader Peter Dunne and the Maori party to support the amendment.
Ric Odom, chair of ComVoices - a network of community and voluntary sector organisations - said the government has not listened to experts about the '' the damage that would be done as a result of these changes.''
"The majority of charitable organisations have been established by ordinary New Zealanders to address a problem that they see in their community and want to fix. This is the very kind of social innovation and self-reliance that the Government is seeking to promote with its welfare reforms and results-based approach.''
He called for the move to be deferred.
Chief Executive of The Bishops Action Foundation Simon Cayley said government should be ''hands off.''
"Most charitable organisations do not rely on Government funding for the majority of their funding. Those charities that have contracts to provide community services on behalf of government are only a minority. The existing Charities Commission has largely recognised this.
"For those charities that do have contracts with government, research has shown that for every $1 they receive from government they deliver up to $5 worth of benefits, supported by members, fundraising and volunteer time. Government should be hands-off."
Chief Executive of Philanthropy New Zealand Robyn Scott said it would ''boost bureaucracy.''
The omnibus bill was designed to shake-up government arrangements in the health and charitable sectors.
It would disestablish the Alcohol Advisory Council and Health Sponsorship Council and transfer their functions to a new Health Promotion Agency.
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