The council plans to stop funding about 20 per cent of the organisations that currently receive repeat funding because of a new policy to "fund fewer organisations better". About 72 per cent of organisations that the council funds regularly are charities. In all, 194 organisations will be affected.
The organisations were sent letters in December giving them until 14 January to respond. Their current funding will end in April, despite the fact that the council received an above-inflation funding settlement from the Government for 2007/08.
Some of the organisations have disputed the decision and said that they would struggle to survive.
Jonathan Best, artistic director of Manchester-based theatre company Queer Up North, claimed that the Arts Council's decision to end his organisation's funding was based on out-of-date information. "They say our audience is too small because we sold 53 per cent of our available tickets in 2006," he said. "What they don't say is that we sold 71 per cent in 2007 and ticket sales increased from 5,500 to 17, 258."
Leigh Stops, marketing director at London-based arts centre Watermans, said one of the reasons it was given was that audiences and programmes hadn't grown as expected. "The Arts Council has made a huge mistake," he said. "Our audiences and programmes have been growing hugely."
Lawrie Simanowitz, a partner at Bates Wells & Braithwaite, the law firm advising several of the organisations, said the process was open to legal challenge.
"After a number of years of regular funding, an organisation has a legitimate expectation that it will continue to receive funding for future years, provided it complies with the obligations of the funder," he said. "That expectation of funding could be enforceable in a court of law."
Some of his clients had received funding for up to 30 years, Simanowitz said. He added that he thought the process was unfair because the four-week appeal period fell over Christmas.
An Arts Council spokeswoman said: "It would be unreasonable for any organisation to expect that we would fund them forever, regardless of our strategy or their performance. All regularly funded organisations sign a funding agreement in which they clearly acknowledge there is no guarantee of continued funding after expiry of that agreement."
She said that it was unfortunate that the response period coincided with Christmas, but added that the council would consider all responses very carefully before making a final funding decision.
The story behind the cuts
The Arts Council England first wrote to all of the organisations that it provides regular funding for in May 2007 to inform them that it was altering its priorities for its 2008-11 funding round.
The letter explained the council's new priorities and said that it would be reducing the number of organisations it funds regularly - regardless of the amount of funding it received from government.
The council said that its new strategy would mean fewer recipients and that it would seek to "reward artistic excellence and encourage artistic risk". This would not mean funding for larger organisations only, it said.
The Government gave £410m to the council for 2007/08 on 12 October last year. It also pledged an additional £50m over three years to mitigate the loss of lottery arts funding to pay for the 2012 Olympics.
After receiving confirmation of its government funding, the council wrote to the organisations it funds with a timetable for plans not to renew funding for some.
It sent a second letter on 12 December to the 194 organisations it plans to stop funding. It set out reasons for the decision and gave organisations until 14 January to respond. Several sought legal advice.
Peter Hewitt, chief executive of the Arts Council, took questions on 8 January about the decision at an Equity meeting attended by arts supporters, including actor Kevin Spacey.