Significant cuts made in the amount that the US planned to spend on Iraq have been criticised in the UK by Liberal Democrat peer Emma Nicholson.
On Monday, the US Congress approved an $87.5bn package for Iraq and Afghanistan, of which $20.3bn was for Iraqi reconstruction.
But $1.6bn of cuts were made in order to order to secure Congress approval for the rest of the package.
Most of the marshland was drained under Saddam Hussein's regime
It has emerged that the cuts include $100m for the Marsh Arabs, and $150m for a children's hospital in Basra.
Baroness Nicholson whose charity, Assisting Marsh Arabs and Refugees, looks after Iraqi refugees in Iran, said the cuts would make it far harder for the refugees to return home.
"It's a great tragedy, and goes against pledges made by (US Secretary of State) Colin Powell at Madrid 10 days ago."
The Marsh Arab money was earmarked for the purchase of heavy earth-moving equipment to help to reshape the marshlands in southern Iraq, which were drained on the orders of Saddam Hussein, after the failed 1991 uprising against him.
About 90% of the original marshlands were drained, and an intricate structure of banks and islands built more than 5,000 years ago levelled.
The ancient and complex civilisation of the Marsh Arabs has survived intact in places despite the disasters, but both the culture and the people themselves are very vulnerable, and remain among the poorest people in Iraq, following persecution by Saddam Hussein's regime.
There have been attempts to define their treatment as genocide.
Although some reflooding has started, re-organising the water flows so that they do not damage the whole region will take a co-ordinated effort.
The US had agreed to take a lead in managing the colossal effort which will be required to restore their life. But they are now not putting up the money needed.
The Bush White House, which hardly has a reputation for extravagance in international development, believed that these funds were necessary. But they were cut in order to win over sceptical Republicans.
Other cuts include more than $150m which was needed for garbage trucks.
Baroness Nicholson said: "I think we have to concentrate far more on the basic items which are needed by the Iraqi people. It's a real shame that Congress did not understand the real needs of the Iraqis."