Splash programmes in Liverpool last year received 600,000 from the Children's Fund, and 500,000 from Connexions. From April this year, the council will receive 125,000 from the Children's Fund.
Liverpool City Council's youth service will now be contributing 136,000 towards Splash, which will leave a shortfall of 340,000.
The council funds will come from an underspend of the youth service's 7m budget following problems in filling 26 vacancies for part-time youth workers.
Councillor Paul Clein said: "The Government says it makes its policy based on evidence, but our evidence showed the programme has had a significant impact on young people. In my ward, the crime rate went down by 75 per cent." The funding pot for the voluntary sector, which last year received around 10,000, has been halved.
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