The Office for Civil Society will abolish its strategic partner programme in 2014.
The programme, which awarded £12.2m to 42 voluntary organisations this financial year, will be reduced in value to £4m in 2011/12 and then tapered down to £3m, £2m and zero over the following years.
No organisation will receive more than £500,000 and only existing partners will be able to apply, with a deadline of 25 February. Priority will be given to organisations that are merging or setting up formal partnerships.
Nick Hurd, the Minister for Civil Society, wrote to strategic partners last night.
"In the current financial climate there is a need to achieve efficiency savings and ensure longer-term sustainability and independence of the sector," his letter says.
"I understand that there will be concerns about the new programme, but I do believe that we have to ensure that we enable the greatest number of organisations to feed into the work of government in the most cost effective and strategic manner."
Volunteering organisations and infrastructure organisations will be most affected by the closure of the programme, which was established by the previous government in 2006 to ensure the voluntary sector’s views were heard in Whitehall.
Ben Kernighan, deputy chief executive of the NCVO, said in a statement: "Many of our members are being cut and face the prospect of more cuts to come in the months and years ahead.
"It is very disappointing that this government has chosen not to support its strategic partners at all from 2014.
"We will be talking privately to a range of strategic partners about how we can ensure that the sector’s voice continues to be heard at a time when this is more important than ever."