The Office for Civil Society will cut its budget for its strategic partners from £12.2m to £7.5m and the number of the partners from 42 to 15 from March 2011.
A letter from civil society minister Nick Hurd to the OCS’s strategic partners last week says the maximum level of grant funding to any one partner will be £500,000 a year.
No organisation will receive more than 25 per cent of its funding from the OCS, the letter says.
The strategic partners programme, begun in 2006 by the Office of the Third Sector, was set up to bring long-term cooperation between government and the third sector and ensure the latter's views were heard. It funds organisations to contribute to policy work and act as advocates for the sector.
Figures provided to the House of Commons in December 2009 by the former charities minister Angela Smith showed that Volunteering England, CSV, the NCVO and the Mentoring and Befriending Foundation each received more than £1m in strategic partnership funding in the financial year 2008/09.
About 10 of the 42 are understood to receive more than 25 per cent of their income from the OCS at the moment.
The letter says the OCS criteria for deciding which 15 organisations will be its strategic partners from March 2011 include the ability to help deliver the government’s vision for the big society.
"Past performance of existing strategic partners will be taken into account where relevant, and there will be a stronger expectation on partners to work more closely with government to deliver key agreed outcomes," it says.
Ann Blackmore, head of campaigns and communications at the NCVO, said it was too early to know how the organisation would cut its costs once its income from the OCS was reduced.
"It’s something for our board to consider in the autumn," she said.
"We are pleased that the OCS has indicated its intentions now rather than later, and we would hope to continue being one of its strategic partners."
Seb Elsworth, head of policy at chief executives body Acevo, said: "All of the partners are pragmatic about the programme and we all knew it was set to end. This is consistent with every message we have had since 2009."
A spokeswoman for Volunteering England, which received £1,575,900 from the OCS in 2008/09, said: "On this occasion we would prefer not to comment."
A spokesman for CSV, which received £1,050,600, said: "CSV is exploring the implications of this news and seeking clarification."