The baby bonus for second and subsequent children will be cut from $5000 to $3000 from July 2013.
Treasurer Wayne Swan said bonus will fall to $3000 from $5000, for second and subsequent children from mid-2013, as Labor looks to save money to achieve its budget surplus.
The measure, announced in the budget update, will deliver more than $500 million in savings over the forward estimates period but the coalition says it's an attack on families already doing it tough.
'Why are they discriminating against families that are bigger?' shadow treasurer Joe Hockey asked reporters in Canberra.
Families Minister Jenny Macklin said the change, to apply from July 1, 2013, recognised families purchased durable, big-ticket nursery items when their first child was born.
'Expensive items such as the cot, pram, change table and baby capsule are generally reused for younger siblings,' she said in a statement.
Mr Swan said the baby bonus had risen substantially in previous years.
'Many people will see this as a tough decision, I understand that,' he told reporters.
However, Mr Swan said the government already provided support to families through part A and B benefit payments, paid parental leave and the school kids cash bonus.
'All of those things indicate that we are very strong supporters of providing assistance to families when they need it,' he said.
But the bonus was not sustainable and needed to be altered.