The move to cut funds punishes the East Sepik provincial government for launching a Supreme Court challenge against the formation of the new national government earlier this month on the grounds it was unconstitutional.
The Ombudsman Commission also supported this challenge and Somare seeks its help again.
"I strongly condemn this action to subvert a lawful special reference to the Supreme Court," Somare said.
"I call on the Ombudsman Commission, other constitutional office holders and the public to see this latest ploy for what it is - a bold attempt to subvert the constitution."
The sitting member for Angoram in East Sepik province further revealed that a "widely rumoured" National Executive Council meeting would convene, with suspending the provincial government placed high on its agenda.
"I am sure the legal advice they received indicated that suspension of the provincial government was only possible through a declaration of a national emergency, which would be impossible to prove," Somare said.
"Only evil-minded people can stoop to these low levels. They have acted in this manner because they know that their Supreme Court case is weak.
"Their questionable regime is now attempting to financially cripple a court action that will show up the illegitimacy of their actions in parliament on Tuesday 2 August."
Somare's father Sir Michael, who remains on medical leave, was recognised as PNG's prime minister before this controversial parliament vote gave power to O'Neill over Acting Prime Minister Sam Abal.
Yet constitutional processes for declaring the office of prime minister vacant, as in the context of the grand chief's unexpectedly long medical absence, were not completed by the time of this parliament vote.
Arthur Somare also warned against the quick promises made by the fledgling O'Neill government.
"Overnight they have discovered an ability to provide free education, free medical treatments and to increase the minimum wage, all actions that are reminiscent of the lost decade of the 1990s when the PNG nation was threatened with bankruptcy and widely regarded as a failed state," he said.
"I appeal to people of good sense to be aware of the dangers of the course of action we are being committed to by a regime that is clearly aware of its illegitimacy and striving desperately to entrench themselves in power."
The O'Neill government has quickly moved to replace key bureaucratic positions in the government, including the long-serving managing director of the state-owned Independent Public Business Corporation, Glenn Blake.
