After record levels of interest in 2000 and 2001, the organisation faces a sudden and sharp drop in the number of people volunteering to work overseas.
"We are sending 100 fewer volunteers this month than this time last year, said Katrina Nevin-Ridley, a VSO spokeswoman.
"We are looking at a situation where we will have to inform many schools and hospitals that we cannot provide them with the teachers and health specialists they desperately need."
The economic downturn and the fallout of 11 September may have discouraged many would-be volunteers from giving up their jobs for two years' overseas service.
VSO plans to run a media campaign and information evenings to raise awareness of the situation.
Case Study, p18.