A proposed 370,000 cut in the coming financial year will mainly hit youth services delivered by the county's 10 community colleges. If it goes ahead, young people could lose on-site access to services, including drop-ins and sexual health support.
The cut will also affect youth centres across the county, as well as rural detached youth work, as the department redistributes its remaining money.
Council officers will be talking to the 10 community colleges to discuss the impact of the cut.
A worker at one of the community colleges said: "Young people's reaction is shock and horror."
The cut is one of four proposed savings for the council's children's services department, which is working towards a 3.4m savings target this year. A second proposal would mean a 200,000 reduction in the funds that schools receive to develop extended schools services.
A county council spokeswoman said youth provision in community colleges would have to be cut unless funding for services could be found in the schools' budget.
She was unable to say how many staff would be affected, as it is up to the individual colleges how to spend their budgets.
There are three possible outcomes to the council's consultation with colleges. It may decide the cuts are necessary; it may decide to replace the youth service money out of its schools' budget; or it may find the money from the dedicated schools grant, which is government funding awarded directly to schools.
Liberal Democrat councillor Pat Ost, the county council's shadow lead member of children and families, said: "The youth development service plays a valuable role in working with young people. Many of these services are delivered through community colleges and it is the funding to these colleges that is being cut. This puts them in a difficult position of having to choose what they spend their allocation on."
The council spokeswoman said: "East Sussex Council will be working with the colleges and looking at ways to develop integrated youth support services to provide a service that includes community youth work."