THE agency responsible for the rescue plan for the Murray-Darling river system will be forced to cut staff after the NSW government reduced the national body’s funding by millions of dollars.

In a move that was branded ”vindictive” by the Labor opposition, the O’Farrell government has halved its funding to the Murray-Darling Basin Authority to $16 million. That would be cut in half again to $8.9 million next year.

The authority’s chief executive, Rhondda Dickson, was in tears when she informed staff last week that funding from the state had been gutted, The Sun-Herald has learned.

The Sun-Herald understands NSW only told the authority of its plans to reduce funding a week ago on Friday, after a board meeting. But they refused to say how big the reduction would be, saying it was budget-in-confidence. The authority was surprised to learn the size of the cut when it was informed on Tuesday afternoon.

The decision has been interpreted as an escalation of the war between NSW and the federal government over the plan to take 2750 billion litres of water away from irrigators.

NSW is at loggerheads over the plan with the federal Minister for the Environment, Tony Burke, and the authority chairman, Craig Knowles, the former state Labor minister.

NSW Labor MP Steve Whan said the funding cut ”seems to be a vindictive decision by the NSW government at a time when the most co-operation is needed in finding a resolution on water”.

The authority declined to comment.