The Government is expected to axe its environmental watchdog this week as part of Whitehall budget cuts.

An announcement that the Sustainable Development Commission is to be abolished is expected tomorrow, just as the environmental and sustainability watchdog publishes its latest report outlining the savings departments could make from being greener.

The report will detail how the Government could make hundreds of millions of pounds of savings over the next Parliament by reducing transport, water use, energy waste and rubbish - savings worth many times the £3 million expenditure on the SDC.

The Department for Environment, Food and Rural Affairs was unable to confirm today if the arms-length body, which is jointly operated by the UK Government and devolved administrations, is to be disbanded, saying no final decision has been made.

But reports of its imminent demise have raised concerns in the Welsh Assembly, where it was last week described as playing an important role in Wales's efforts to become greener.

The SDC has helped central government departments save the equivalent of £16 million in carbon emissions reductions and £13 million in reducing water waste.

The commission has also worked with the NHS and schools to reduce their emissions and energy use and recommended the "whole-house" green makeovers to make them more energy efficient, a policy that was adopted by all three parties before the General Election.

Its advice on whether a Severn barrage could be built sustainably also paved the way for consideration of tidal schemes in the Severn Estuary.

Greenpeace campaigner Louise Edge condemned the decision to axe the SDC as "incredibly short-sighted".

"The commission has always given great value for money, cutting wasteful energy use across Whitehall and providing vital advice on how departments can slash their carbon emissions.

"You have to wonder about the thinking behind scrapping a £3 million body with a record of success while pushing ahead with the multibillion-pound Trident replacement, which the military doesn't even want. This is muddled thinking," she said.

Margaret Ounsley, head of public affairs at WWF-UK, said: "Everybody knows that we are facing a heavy deficit, and we should not be too prescriptive about how the Government deals with it.

"However, it would be the worst sort of mindless hacking from Government if we were to lose the capacity to measure and report on its moves towards meeting its own commitments to become leaner and greener.

"Shooting the watchdog does not make always make for savings."

And Friends of the Earth's executive director Andy Atkins said: "The Sustainable Development Commission has played a crucial role in helping Government departments work together to tackle the triple threats of climate change, economic downturn and inequality - as well as keeping a critical check on progress.

"The coalition must be held to account on its promise to be the greenest Government ever - and explain how it will continue to green Britain, saving money and creating jobs at the same time - without the Sustainable Development Commission's expert guidance and overview."

Shadow energy and climate change secretary Ed Miliband said: "The coalition has made some terrible decisions on the environment - scrapping the loan to Sheffield Forgemasters, shelving Labour's plan for the Green Investment Bank.

"They promised to be the greenest government ever but they're completely betraying that promise."