Senator Milne told the National Press Club in Canberra on Tuesday the Gillard government's decision to allow mining in Tasmania's Tarkine and a push by unions to make coal-seam gas development easier meant Labor had effectively torn up its post-election deal with the Greens.
Mr Howes, whose union has campaigned for new gas developments, along with jobs in the Tarkine, said Labor would not "sacrifice jobs at the altar of green ideology".
"She is upset that she lost the campaign in north-west Tasmania. Well, boo-hoo. At the end of the day the federal Labor government has delivered for jobs," Mr Howes told reporters.
He said the region has one of the highest unemployment rates in the country and the mining area would take up only one per cent of forest area.
Mr Howes said Senator Milne's declaration did not change things in Canberra.
"The Greens haven't been supporting a whole range of Labor's initiatives in the parliament," he said.
Mr Howes said Labor had stood up for the environment, particularly through putting a price on carbon.
"(It's) the Labor party who has introduced a price on carbon, extended the world's largest national parks in oceans.
"This is a ridiculous furphy and obviously a political ploy by a leader ... who has presided over a collapse in her party's support since she took over."