The initiative will be funded from re-allocated money in the Government's renewable energy future fund.

The National Farmers' Federation said in a statement that the announcement "recognises that carbon abatement through the agricultural sector is an opportunity that should not be ignored".

But NFF pointed out that the international community is at varying stages in their efforts to reward the carbon abatement that agricultural and land use management delivers through the proactive efforts of landholders across the globe.

"The international marketplace for carbon credits has been stunted in the wake of the lack of progress at Copenhagen, but the market may certainly develop in the future and so today’s announcement is prudent in gearing farmers up to engage as and when markets develop," NFF said.

"The rules underpinning these markets can often be confusing and difficult to interpret at a practical level.

"This initiative will hopefully deliver some clarity for Australian farmers about what practices delivered on farm will be compliant with the international carbon markets."

NFF said in order to maximise the opportunities for Australian farmers through carbon farming, two key ingredients are still required – the Government must continue to actively pursue changes to the flawed international carbon accounting rules to ensure that they appropriately acknowledge the positive carbon mitigation practices undertaken by farmers.

NFF said extra funding would be needed to optimise the mitigation opportunities through land use and livestock management.

"The ALP has positively acknowledged their support for more R&D funding in this area today but we are still looking for robust funding commitments," NFF said.

The Coalition and the Greens both criticised Labor's plan, with Opposition environment spokesman Greg Hunt arguing the deal short changes farmers.

"Labor’s claim that the Coalition scheme would not allow Australian farmers to access carbon markets is a fabrication," Mr Hunt said.

"Our scheme offers the added benefit of access to funds through our $10.5 billion over 9 years Emissions Reduction Fund.

"Julia Gillard’s scheme short-changes farmers by offering them only a fraction of what the Coalition plan could deliver from the ERF."

Greens deputy leader Christine Milne said Labor's scheme would cause "more problems than it solves because it doesn't understand either the climate challenge or land management".

"The government is dancing around the climate crisis, coming up with more ill-thought-out nonsolutions because it refuses to do the right thing – protect our forest carbon stores and introduce an effective, well-designed price on pollution," Senator Milne said.

"Those in the offset market we have spoken to this morning are crying out for more detail. It sounds like, at best, this announcement is not new, it is simply trying to address the vacuum left when the Greenhouse Friendly scheme ended in July leaving businesses in the voluntary carbon offset markets in limbo.

"We are also concerned that it could create more problems for farmers and other land managers if it focuses solely on carbon without at the same protecting farming land, water and biodiversity from perverse outcomes.

"Farmers across Australia will also be confused, and troubled that this could cause the same problems for them as managed investment schemes. Schemes designed by the city for the city without thinking about the impact on people on the land have a bad history.

"Perhaps worst of all, this is yet another new badly-designed climate promise funded by taking money away from renewable energy."