The Department of the Environment, Food and Rural Affairs (Defra) is facing budget cuts of between £130m and £270m.
Bird flu was just one of the issues to be dealt with by Defra
The prospective cutbacks come as the department faces bills for a series of countryside disasters such as bird flu, foot-and-mouth and bluetongue.
It is understood to be considering cuts across the board, for agencies such as the Environment Agency and British Waterways and various farming projects.
The Campaign for the Protection of Rural England said this was "alarming".
'Lack of credibility'
CPRE spokesman Tom Oliver said it was hard to see how the government would be able to deliver on its existing environmental commitments if "yet more cuts" were made.
"It suggests that across the board, whether you're talking about landscape, wildlife, or access to the countryside or action on climate change, there is a real lack of credibility about government priorities if these cuts are being suggested."
He told BBC News: "You can't expect intelligent and effective environmental outcomes if you constantly starve the actions required of the resources they need."
A ministerial source has told the BBC the situation is "very serious" and that a number of agencies will be hit by spending cuts or, at best, a spending freeze.
BBC political correspondent James Hardy said the cuts were due to be made over the next three years.
However, it is understood that cash set aside for building and other infrastructure projects, including £200m for flood defences, will escape the spending cuts.
A Defra spokesman said that, in common with other ministries, detailed planning work was under way, but that no final decisions had been taken.