Volunteering charity CSV said it had already been hit by the funding crisis that earlier this year it warned would strike the sector when the £20m that was previously available to charities operating national projects for disadvantaged people began to dry up.
At the end of 2006, the DWP decided to stop central distribution of all such funding. Instead, it will process European Structural Funding, including the European Social Fund, through regional statutory bodies such as Jobcentre Plus.
The DWP said the new system would make the best use of the UK's share of the six-year grants, which have been reduced because of the expansion of the EU.
CSV, which argued that some projects can only access funding nationally, has been forced to close four projects and scrap 15 jobs in Birmingham, Middlesbrough, Plymouth and Truro.
Jason Tanner, head of press at CSV, said: "The race is on to find replacement funding for key projects such as the Whole Baked Cafe in Bristol, a project designed to show what can be achieved by people with learning difficulties in a commercial environment."
Youth charity Fairbridge, which received £500,000 a year for its larger initiatives, has not yet had to close projects, but said it was finding planning for the future extremely difficult.