An Auditor-General's report has highlighted serious problems with the department's enforcement of environment laws and slammed its "passive" approach to ensuring developers comply with conditions to protect areas such as the Great Barrier Reef.

The audit found the department was too under-staffed to administer Australia's Environment Protection and Biodiversity Conservation Act and officials were not properly trained to monitor the activities of developers.

The review comes as the federal government prepares to slash hundreds of jobs in the Environment Department over the next three years and hand approval powers to state governments.

But Environment Minister Greg Hunt said on Friday the report was an audit of Labor's time in power and the failings identified were the fault of the previous government.

"We think there are lessons to be learnt and we've begun to implement them," Mr Hunt said. "The number of compliance monitoring staff has increased almost threefold."

Auditor-General Ian McPhee found the department did not have an appropriate set of risks against which it could assess compliance by developers. His report said the department's performance "does not instil confidence" that environmental protection measures have "received sufficient oversight over an extended period of time".

The Australian Conservation Foundation said the findings were concerning at a time when the Abbott government was reforming environmental laws and the government was "in no position to hand over federal environmental approval powers to state governments".

Greens senator Larissa Waters said even though the department was already under-resourced, the budget ''cuts hundreds of staff from the Environment Department, including 129 from the division responsible for compliance and enforcement''.

"The Abbott government ticks and flicks massive coal and gas projects, proclaiming the environmental damage will be offset with conditions, but [this] report shows these conditions are not being enforced," she said.