Combat Stress runs its own residential services for veterans who need intensive support and have complex mental health problems, but NHS England has decided to set up a new national service instead.
A spokeswoman for the charity said it was not anticipating any job losses at this stage as a result of the decision.
The news comes after a difficult couple of years for Combat Stress, which made 12 members of staff redundant a year ago after the charity decided to close its welfare service.
A second round of job losses followed later that year when the charity announced that 13 per cent of its 330-strong workforce could be made redundant as part of a new five-year strategy designed to save £1.6m a year.
The charity was unable to provide an update on this process before publication of this article.
In a statement, Sue Freeth, chief executive of Combat Stress, said the charity’s residential programmes for veterans with mental health issues were "respected around the world" and called on the NHS to reconsider its decision.
"As we have done for nearly a century, Combat Stress will continue to provide our world-leading in-patient treatment and support service, which is now reliant on funding from our generous individual and corporate supporters," she said.
"However, without the money we once received from the government and the NHS, and with no similar NHS service available, fewer veterans will be able to access residential treatments."
In a statement, NHS England said that its new national service, which will be launched next month, would help veterans stay closer to home and get the support they needed in areas such as occupational therapy, substance misuse, physical health and employment.
Dr Jonathan Leach, chair of NHS England’s Armed Forces and their Families Clinical Reference Group, said: "The NHS is committed to providing every veteran who needs mental health support with the best care, which is why we have already set up a dedicated new service based directly on feedback from veterans themselves.
"To build on this, we are investing £3.2m in a national complex treatment service, launching next month, which will treat more patients, over a longer period and closer to home, which veterans have told us they prefer."