MFAT chief executive John Allen confirmed on Thursday 305 positions would go - 169 ministry staff here and overseas, and 136 locally-hired staff in foreign missions.
Embassies in Warsaw and Stockholm will be closed as diplomatic activity in Europe becomes centred on Berlin and Brussels and 600 of the ministry's 1420 staff will have to re-apply for their jobs.
Mr Allen says they won't be re-hired on the same terms and conditions.
The cuts will save $25 million a year and Mr Allen says there are more "efficiency gains" in the pipeline.
Labour MP Phil Goff, a former foreign minister, says the cuts will hugely damage the ministry's capacity and performance.
"However they dress it up, this is a gutting of core ministry staff," he says.
NZ First leader Winston Peters, also a former foreign minister, says it's "insane " to reduce diplomatic representation at a time when New Zealand needs it more than ever.
He says world trade is becoming increasingly complicated and difficult.
"This is an experimental approach to a business model and it's entirely without merit - the government doesn't understand international relations and it's oblivious to the pressures faced by New Zealand exporters."
The Green's foreign affairs spokesman, Kennedy Graham, says foreign policy is going to be dominated by purely trade interests.
"New Zealand's reputation as a country with a proudly independent foreign policy risks being tarnished if we gut the ministry of experienced staff," he says.
NZN