The Abbott government's decision to shutter a 50-year-old Mount Macedon-based emergency management training campus is a ''significant blow'' to public sector disaster response, according to Labor.

The federal government will, by mid-2015, ''transition'' the Australian Emergency Management Institute into a Canberra-based virtual institute, in a move flagged in the budget papers, saving Australian taxpayers about $900,000.

The 44 employees are being asked to relocate or take a redundancy package.

Shadow attorney-general Mark Dreyfus said that for emergency services workers and efforts, the closure was a significant blow.

There will be a serious loss to the emergency management community when the short residential courses are replaced by an online service from Canberra, he said.

The institute offers a diploma of emergency management to public service members, including bureaucrats, the Country Fire Authority and State Emergency Services.

But a spokesperson for Justice Minister Michael Keenan said the new modernised Canberra-based model would bring skills directly to the client, building on the strong foundations of the 50-year old campus.

''We anticipate that most courses will continue to be delivered face-to-face around Australia,'' the spokesperson said.

The institute played an active role in implementing the findings of the royal commission into the Black Saturday bushfires, said Bendigo Labor MP Lisa Chesters.