Mr Wilkie says estimates from the Parliamentary Budget Office show Tuesday's budget provides only about one-third of what is required.
It sets aside $121 million over four years to establish Environment Protection Australia - about one-third of the budget office's estimate of $322 million.
"This should alarm us all," Mr Wilkie told reporters.
"It won't be able to do its job. I'm calling out the government. I'm saying go back to the drawing board, find the money, and set up a genuinely independent and effective EPA."
Federal Environment Minister Tanya Plibersek has promised the watchdog will be "a tough cop on the beat", responsible for enforcing a new set of laws currently being drafted to better protect nature.
It will also take over the minister's responsibilities for approving or rejecting new developments, and enforcing any conditions attached to new projects.
AAP has sought comment from the minister.
It is understood the budget office's costings don't account for existing staff and resources in the environment department's approval division, which will move over to the new agency.
It is also understood the costings include other elements that are not part of the government's model for the watchdog.
Mr Wilkie has said the budget office modelled a range of options for the authority, and the $322 million figure was the one that most closely matched the government's plans.
The Australian Conservation Foundation says the watchdog must be properly funded to restore public trust in the nation's environmental assessment system.
"A total area of threatened species habitat larger than the state of Tasmania has been destroyed since Australia has had a law that is meant to protect nature," says biodiversity adviser Brendan Sydes.
"Given the government has set a target of no more extinctions, we would expect it to boost funding for Environment Protection Australia so it can do its job fully and effectively."
The last State of the Environment report painted a dire picture of environmental health in Australia, finding 19 ecosystems spanning the nation are showing signs of collapse or near collapse, with nearly 2000 species in peril.
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