The Compass Theatre Company, based on Gibraltar Street in Sheffield city centre, has been told its funding from the Yorkshire branch of the Arts Council has been earmarked for the axe despite a 20-year relationship between the two organisations.

The Arts Council say no final decisions have been made. Compass, which has won national acclaim for its productions, will know their exact fate in two weeks' time - on January 25.

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Yesterday members submitted a finalised statement of appeal, stating why they should continue to receive their annual £240,000 funding. The cash could dry up as part of swingeing cuts being proposed nationwide as of March this year.

Compass General manager Craig Dronfield urged supporters to keep lobbying the Arts Council on their behalf.

As a result of the uncertainty, Compass has already been forced to cancel a forthcoming tour of The Dresser - much to the disappointment of organisers, actors, venues, ticket-buyers and even legendary actor Sir Ian McKellen.

Alan Brent, chairman of the Yorkshire branch of acting union Equity, said: "Ian McKellen himself told me he had planned it see it because he himself once starred in it. He, like everyone else, now has to miss out.

"The Dresser had to be cancelled despite rehearsals being well underway and venues all over the UK being booked to show it."

If Compass' appeal is unsuccessful, the group will have just two months to secure alternative funding if they want to continue.

"It is a huge concern that the Arts Council wants to shut down smaller companies such as Compass," said Alan. "They are where careers start and stars are formed."

A Yorkshire spokesman for Arts Council England said: "The proposal not to renew funding to Compass Theatre Company is part of a renewal of the Yorkshire theatre portfolio to revitalise theatre touring and enable quality new voices to be heard.

"Our letter to Compass Theatre Company explains that this is not a final decision.

"We regret that the company made such an early decision to cancel their forthcoming tour of The Dresser, the development of which has been supported through our current investment in Compass."

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