Shine Week, which the previous government created to counteract negative perceptions of young people, was due to take place between 12 and 16 July.
But a consortium of organisations led by the National Youth Agency, which holds an £800,000 two-year contract to deliver Shine 2010, has been notified that funding for the project is being withdrawn.
NYA chief executive Fiona Blacke described the government's decision to scrap the campaign as disappointing.
"We hope schools and youth organisations can use events they planned to coincide with Shine Week to promote positive stories about young people," she said.
Charlotte Hill, advocacy manager and soon-to-be chief executive of UK Youth, another partner in the campaign consortium, added: "Hopefully things will still go on without the government's backing."
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