Prime Minister Tony Abbott's decision to merge Australia's overseas aid agency (AusAID) into the Department of Foreign Affairs and Trade (DFAT) has aroused concerns over the national public service and Australia's international reputation, local media ABC News said on Thursday.

Abbott made this announcement Wednesday along with the sacking of three public service chiefs in the first few hours after he was sworn in as prime minister.

Former AusAID officials suggest this decision could affect the country's diplomatic standing in the region and act as part of a wide-ranging shakeup of the public service.

"There is inevitably something of a signal to the Asian region that Australia is tilting in some other direction and perhaps pulling back from development issues and tilting towards diplomatic issues," Peter McCawley, a former director-general of AusAID and a current economist with the United States' Agency for International Development (USAID), was quoted as saying.

"But I believe the real question is not what is the impact on Indonesia and other countries in the region, but what is the impact on Australia and what is the impact on our own standing in the Asian region." he added.

The Coalition has promised to cut 12,000 Commonwealth public service jobs over the next three years. The prime minister planned to cut 4.5 billion Australian dollars (4.21 billion US dollars) from foreign aid to save more federal budget to contribute to the government's diplomatic policies, according to media reports.

Annmaree O'Keeffe, AusAID's former deputy director-general and current research fellow at the Lowy Institute for International Policy, said this will have big ramifications for Australia's aid program.

How it will be managed remains to be seen because there's tension from time to time between AusAID and DFAT on how development can support foreign policy objectives.

"There is a conflict because then you start getting into this ridiculous discussion around how aid is a part of a global relationship to lift people out of poverty but it's actually all about trade," said Archie Law, the executive director of charity ActionAid Australia.

According to Law, the decision about this merge showed the conservative politics for the Coalition remains as the dominant value.

He also told local media that he received opinions of disappointment worldwide from his peers after the government's announcement.

"Unfortunately, I was with the United Nations in New York when Australia had this sort of policy before, and Australia wasn't highly regarded on the international stage," Law was quoted as saying.

Those major changes has been criticized as the backwards step in the public service sector, but Abbott has emphasized how much he respects the public service.