A parent advocacy charity says it might be forced to close after the City of Edinburgh Council introduced a tendering process that the charity claims prevents it from applying.
Kindred, which employs 18 staff, has supported families of children with disabilities for more than 25 years.
The charity has already made two redundancies and is planning three more after a £170,000 lottery award came to an end.
The council has been another key funder. It awarded the charity a one-year grant of £46,000 this year to provide information to parents, which it does mainly through a helpline that supports 500 Edinburgh families of children with disabilities.
But the grant expires in March and parent information is being bundled up in a £1.2m contract that is being put out to tender.
The contract includes £206,000 for parent information, which would cover the helpline costs, but Sophie Pilgrim, director of Kindred, said the charity was effectively unable to bid.
"We cannot apply for the current tender because there is a mix of services for which we have no experience," she said. "Our funding will go to other providers with no experience of supporting parents."
Large charities, she added, had rejected its approaches to bid together.
Pilgrim urged councillors to halt the "flawed" procurement process, which she said was biased against small charities and "could take us under". She said: "The sensible solution is to split the tender."
Kindred supporters are staging a carol singing protest tonight outside the city chambers. A "save our helpline" petition has more than 1,800 signatures.
A council spokesman said: "The open tender for this new service was produced after input from both service users and providers. This valuable stakeholder engagement helped to inform the specification and highlighted the need for a ‘one-service’ philosophy, with providers working together to improve services for children and their families.
"This opportunity was openly advertised for all interested parties and collaborative bids between third sector organisations were encouraged, with extra time being allowed for the process. The outcome of the tender process is still to be determined."