A backdown on job cuts at the Ministry of Foreign Affairs and Trade (MFAT) has failed to appease unions and opposition parties.

MFAT chief executive John Allen informed staff on Thursday that 79 positions will go as part of a ministry restructuring, instead of the 305 jobs proposed for cuts in February.

The jobs being cut are 23 foreign policy positions, and 56 corporate services roles.

Mr Allen said MFAT has also revised proposed changes to allowances for overseas staff, so postings "remain attractive", especially to staff with families.

It follows the announcement by Foreign Affairs Minister Murray McCully on Wednesday that the Stockholm embassy, which opened just four years ago, will close.

NZ First leader and former foreign affairs minister Winston Peters says the cuts will make New Zealand an "international laughing stock".

"National is retrenching at a time when they should be pushing our export interests all around the world. They are doing this when other countries are upping their interest in offshore investment," he said.

Mr Peters says the closure of the Stockholm embassy is short-sighted.

Unions representing staff say the scaled-down plan is still hard to accept.

"This is no cause for celebration," Public Service Association national secretary Brenda Pilott.

"The fact is there are still about 80 jobs being lost including frontline foreign policy officers which will impact on the way MFAT functions and on those very important global and trading relationships."

Foreign Service Association president Warren Fraser says it's difficult to see so many positions and people being lost without affecting the work MFAT does.

"These job losses will impact on staff workload and the delivery of foreign and trade policy and we know there are further cuts in the pipeline," he said.