The Government – like the Tory opposition – has promised not to cut its overall spending on overseas aid.
But the Department for International Development (DFID), which will spend more than £6bn this year, has not escaped the economy drive ordered by Alistair Darling.
It pledged yesterday to find £150m of savings in back-office costs through "ambitious efficiency and value-for-money plans".
The department said it could halve its bill for outside consultants because of its success in building up in-house skills in finance and IT. It would also pool resources with other Whitehall departments and attempt to recoup cash by driving down procurement costs for goods and services.
DFID promised that money saved would be channelled back into work in the developing world.
"The Government will continue to keep its promises to the world's poorest people," it said. "The savings will help ensure every pound of taxpayers' money has more impact on reducing poverty," it said.
The department, headed by Douglas Alexander, said it remained fully committed to its target of spending 0.7 per cent of gross national income on aid by 2013. It is currently estimated at 0.43 per cent.
The Conservatives are also committed to the 0.7 per cent target and have promised to ring-fence overseas aid in the search for spending cuts.
DFID was established in 1997 after the newly elected Blair government took overseas aid out of the Foreign Office budget and gave it a Cabinet post. Its budget is due to rise to £7.8bn next year. The biggest recipient of British aid is India, followed by Iraq, Afghanistan, Nigeria and Ethiopia.