The £500,000 grant was awarded to help Mermaids create a network of groups across the country.
But following criticism of the charity, the Big Lottery Fund has announced that it has launched a review.
Criticism includes an article by the Sunday Times around the charity's stance on treatment for gender dysphoria, a condition where people are born into a body with the wrong gender.
The newspaper article alleges that parents are being pressured to support life-changing medical procedures for their children and doctors are being subjected to bullying.
TV writer Graham Linehan has also voiced concerns around the group and the grant and posted a thread on Mumsnet, that has since been deleted, urging people to write to Big Lottery Fund if they have concerns about the organisation and the funding award.
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