THE Federal Government has cut legal aid to "hundreds" of NSW and Victorian farmers who are facing native title claims.

Canberra law firm Williams Love & Nicol has told farmers who hold licences and leases on crown land, it could no longer fight for them in native title claims due to the federal funding cuts.

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In a letter to clients, WL&N partner Mark Love said the Federal Attorney General's Department's refusal to adequately cover its legal costs meant it could not represent "hundreds" of respondents holding crown land grazing, mining and beekeeping leases and licences.

"(The) Attorney General's office has recently informed us they intend to enforce the (2007) revised Guidelines on the Provision of Financial Assistance under the Native Title Act 1993," the letter states.

A Department spokeswoman said funding had not been cut, but simply restricted.

"Changes to the guidelines restricted funding to respondents who have a real and significant interest in claims," the spokeswoman said.

"The Australian Government no longer considered it reasonable to provide assistance to low impact interests, such as beekeepers and fossickers, who hold minor licences and permits and have their interests protected under the Native Title Act."

But the Victorian Farmers Federation is uncertain what impact the WL&N decision will have on Victorian crown land licence holders with water, grazing and other rights of access.

VFF Land Management committee chairman Gerald Leach the VFF had already received calls from some members uncertain about the changes.

"Once we know more, the VFF can ascertain if there's a need for legal representation," Mr Leach said.

The Victorian Government is due to set up an alternative Native Title Settlement Framework that operates outside the Federal Court, as a cheaper and quicker means of resolving native title claims.

The system is to be based on the Victorian Government negotiating a deal giving indigenous communities access to crown land, without restricting other users' rights.

However the Victorian scheme has been put on hold, due to the Federal Government failing to honour a promise in early 2009 to fund it.