Late last year the Coalition was accused of rorting the Regional Partnerships program by signing off on scores of application in the dying days of office before previous elections and for favouring marginal National seats with projects approved.

The budget papers show Labor has established a replacement Better Regions program, as flagged during the election campaign, and a Regional Development Australia network which are both said to fund major investments in rural communities.

Minister for regional development, Anthony Albanese, said the $176 million Better Regions program will encourage economic and community development and invest in local infrastructure projects such as the revitalisation of main streets, multi-purpose centres, major sport venues and community transport.

Mr Albanese named regions such as the NSW Hunter and Kempsey, Geelong and Bendigo in Victoria, Queensland's Townsville and the Sunshine Coast and Alice Springs in the Northern Territory as areas of investment.

A new Regional and Local Community Infrastructure program will also be funded as an additional program for recreational and environmental infrastructure in local communities.

Both new programs will replace the Sustainable Regions and Regional Partnerships which Mr Albanese said had been discredited by the National Audit Office last year as "having fallen short of an acceptable standard of public administration".

But Coalition MPs said major cuts to rural programs, and in particular Regional Partnerships, combined to strip more than $1 billion from rural and regional areas.

Nationals leader, Warren Truss, said

Labor has abolished the Regional Partnerships and Growing Regions programs, saving $436 million, but it has only put $176 million back for regional development. "All of that funding is already committed to Labor’s election promises and there will be no new money for regional projects until late 2009 - just in time for the next election campaign," Mr Truss said.

"Regional programs that created and maintained jobs in some of the nation’s most hard-pressed communities have been abolished.

"Labor said it would keep Regional Partnerships but has now axed 116 vital projects approved by the Coalition before the election. These include community centres, hospitals, support for the Royal Flying Doctor Service, sporting facilities and surf rescue boats.

"Labor says the program is a pork barrel, yet none of these individual projects have ever been criticised. Labor even supported many of them during the election campaign."