Alun Ffred Jones said Natural Resources Wales (NRW) had offered confusing advice and was sometimes seen as being "too close" to the Welsh government.
Mr Jones has outlined his concerns in a letter to NRW, following an inquiry.
But NRW said it was "clear" about its purpose and insisted it was already dealing with many of the points raised.
The body was formed in 2013 by merging the Countryside Council for Wales, the Environment Agency and the Forestry Commission.
In his letter, Mr Jones wrote: "NRW does not appear to be clear about its purpose as an organisation... many of the more specific issues raised... stem from the confusion that exists within NRW about its purpose and the apparent lack of awareness at the top of NRW of how it is perceived on the ground by key stakeholders and staff."
The letter states some councils were confused on occasions when NRW stated it had no objection to a planning development, but then listed "serious concerns" about its impact.
Mr Jones added some organisations raised concerns the environment body was too close to Welsh ministers, particularly in relation to the controversial Â£325m Circuit of Wales race-track project planned in Blaenau Gwent.
NRW chief executive Emyr Roberts said creating NRW had been "uniquely complex" and "nothing like this has ever been attempted before anywhere in the world".
"We are clear about our purpose and working with staff and stakeholders around this new concept of managing our natural resources in a more joined up way," he said.
"We are already taking action on many of the points raised and, against a backdrop of significant change, I'm very proud of the fantastic work our staff have continued to do for the people, environment and economy of Wales," Dr Roberts added.
A staff survey published in April found only 14% of workers at NRW felt the merger that led to its creation was well managed and one in five thought the organisation was well managed.
Just over half of its 2,000 staff took part in the survey.

The Holigost - or Holy Ghost - was one of four "great ships" commissioned by the king in his war against France.
It was spotted in an aerial photograph by historian Dr Ian Friel, in an area of Hampshire's River Hamble described as a medieval breaker's yard.
Historic England said it was a "tangible link" to Henry V.
The Holigost fought in sea battles during the Hundred Years War which broke the French naval power.
Dr Friel identified the wreck when he was revisiting documentary evidence for a book on Henry's navy.
Future scientific research on the ship, which could include sonar and aerial imaging using drones, could reveal much about 15th Century shipbuilding and improve understanding of life aboard ship, naval warfare of the time, dock building and docking practices.
Historic England said it was taking steps to protect and investigate the shipwreck in part of the river next to where Henry's flagship, the Grace Dieu, was identified in the 1930s.
Duncan Wilson, Historic England's chief executive, said the investigation in the 600th anniversary year of the Battle of Agincourt, was "immensely exciting."
"It holds the possibility of fascinating revelations in the months and years to come," he added.
Dr Friel said: "In my opinion, further research leading to the rediscovery of the Holigost would be even more important than the identification of the Grace Dieu in the 1930s.
"The Holigost fought in two of the most significant naval battles of the Hundred Years War, battles that opened the way for the English conquest of northern France."
Wales' environment body is not clear of its own purpose, the chair of the assembly's environment committee has claimed.
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The wreck of a 600-year-old warship which helped Henry V wage war on France is believed to have been found buried in a river.