Melbourne: Australia on Wednesday announced that it was slashing the aid it provides to the fast growing economies of India and China, even as it boosts spending in South-East Asia, the Pacific Islands, Middle East and Africa.

According to a report in a newspaper, the country's Foreign Minister Kevin Rudd has announced the government's response to the first independent review of Australia's aid programme in 15 years, accepting 38 of its 39 recommendations.

The review led by former Sydney Olympics boss Sandy Hollway found the aid programme was good, but could be better with some tweaks.

With the aid budget set to touch to over 8 billion Australian dollars over the next five years, Rudd said Australia's nearest neighbours -- Indonesia, Papua New Guinea and East Timor -- would remain its top focus.

"It is the region which we believe that we can be most effective in," Rudd said.

He said, "It is the region where the rest of the world often expects Australia to provide leadership. And it is the region of the world where our most direct, strategic and economic interests lie."

Australia also will increase its aid to developing nations in East Asia and South Asia, but China and India no longer qualify.

"They are respectively the second and sixth largest economies in the world. Both have considerable economic capacity," Rudd said.

Australia may continue to provide some assistance to the countries through multilateral organisations and regional programmes.

The government will also boost its aid to the Middle East and Africa.

The government said any future increases to Latin America and the Caribbean will be "modest".

The government has pledged to analyse the aid programme's progress every year and scrap programmes that are not delivering. It has also agreed to five-yearly independent reviews.

The government will consider at a later date the review's recommendation that the name of the foreign affairs portfolio be extended to include the words International Development".

The government this year boosted aid by almost half a billion dollars to Australian 4.84 billion in 2011/12 – about 0.35 percent of gross national income (GNI).

Rudd said the government remained committed to boosting aid spending to 0.5 percent of GNI by 2015-16.