The Challenge had been helping to deliver the government-backed programme for 16- and 17-year-olds in London, the South East and the West Midlands.
However, the NCS Trust announced that it will not renew the contract from 2020 after a disagreement over a shared IT system.
The contract and the income relating to delivery of it was the principal funding source for The Challenge, according to its annual report.
In a joint statement, The Challenge's chairman, Bill Ronald, and chief executive Oliver Lee, said that the charity will continue its other work.
This includes HeadStart, a programme developed in partnership with the Mayor of London and employers, designed to bridge the gap between education and employment, as well as enabling young people to become socially active in their local community.
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