Environmentalists argue that Kenya simply cannot afford to lose any more forests.
Passions are stirring on the slopes of Mount Kenya with angry protesters marching through the region's protected forests.
Fourteen forests will be affected by the move, which has been condemned by environmental groups.
That land, which represents one tenth of all Kenya's forests, is to be handed over to squatters and local authorities.
'Heinous crime'
Large areas around Mount Kenya are already threatened by illegal logging, but the government says it is simply trying to tidy up the forest boundaries, and that much of the land is already being lived on.
But Kenyan newspapers have described the scheme as a foolhardy and heinous crime.
Critics believe it is well connected individuals and not squatters who stand to gain, and that the government may try to use the land to buy support in the run up to next year's elections.
Environmentalists argue that Kenya simply cannot afford to lose any more forests.
Mount Kenya is a major water catchment area, but illegal logging has already had a devastating impact on the area and on water supplies at a time when millions of people here are being affected by drought.
East African Wildlife Society worker Sam Woole said the effects of this policy could be far reaching.
"When you denude the land you make it much more easier for there to be these extreme cycles, where you have floods during the wet season and then rivers dry up during the dry season," he says.
"In a country where people depend on natural sources of water, people will definitely become poorer."
The United Nations has echoed those concerns and earlier this week a German environmental organisation decided to withdraw a conservation award to the Kenyan government.
The award would have been in recognition of Kenya's campaign against lifting the ban on ivory sales.