The government set aside 8.2 billion kronor (873 million euros) in its draft September 2016 budget to cover the expected cost of providing housing, welfare and education for the arrivals, as well as a large increase in staff at the Swedish Migration Agency.
But with the number of migrants continuing to soar, the government is considering tripling the amount to over 24 billion kronor out of a total aid budget of 43 billion kronor, according to Swedish Radio (Sveriges Radio) which cited confidential correspondence between government ministries.
"Development assistance plays a crucial role in the daily lives of hundreds of thousands of people," a group of 18 charitable and church organisations wrote in an open letter published on the website of the Aftonbladet tabloid.
"If development aid is siphoned off, then people facing extreme poverty or war will see any chance of improving their lives sharply diminished," the signatories, which included sexual health charity RFSU, the Swedish Church and the WWF (World Wildlife Fund), said.
Sweden, a country of 9.8 million, is expecting to receive up to 190,000 asylum seekers this year -- putting it among the EU states with the highest proportion of refugees per capita as the continent struggles with its biggest migrant crisis since the Second World War.
With the tide of arrivals soaring to nearly 10,000 a week, refugee accommodation is running out, meaning the authorities are having to erect tents to house some of the newcomers.
"Sweden is the largest development aid donor in the world and the country hosting the largest number of asylum seekers" per person in Europe, said Finance Minister Magdalena Andersson. "We are not ashamed of our humanist policy."
Sweden is one of only five countries in the world to currently meet a UN target of allocating at least 0.7 percent of its Gross National Income (GNI) to development aid.
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The Foreign Ministry, which handles development aid, expressed shock at the proposal to cut overseas spending to free up funds for migrant care, documents published by Swedish Radio showed.
"Children in poor countries will have to leave the school. The mothers will die in childbirth. The protection of forests, oceans and other ecosystems will be undermined," the ministry warned in a written internal response.