A city mental health centre will close in 'four months' if alternative funding isn't found after Sheffield Council cut their funding.
The Mental Health Action Group Sheffield based in Creswick Street, Langsett, provides a space to support around 250 people suffering from conditions such as depression and bipolar disorder.
The service received £10,500 a year from the council for 25 years and is manned by volunteer staff.
The council said the 20 schemes which receive the funding would be invited to apply again for cash last year.
But MHAGS being one of these council-backed initiatives, has not made the grade following the application process.
Council bosses previously blamed 'huge budget' cuts from central government as the reason why the funding is to be withdrawn.
In a joint statement, project co-ordinators Tim Jones and Scott Milnes said the council claimed they had made 'derogatory' comments on the application form.
"We have supplied copies of our filled in application form to several independent bodies and they were in no doubt there was anything 'derogatory' in the application form.
"This has left the group with a very uncertain future and we have four months to access alternative funding or inevitably face closure.
"If this happens there will be suicides and mental health issues which will over stretch the statuary mental health services and doing so will increase the financial burden on an overstretched and underfunded health service."
The group say they will continue to campaign against the decision.
A spokesman from Sheffield Council, said: “We have a grant for charities and last year let MHAGs know we were making changes to the bidding process. Some of this is now done through competitive bidding but the overall amount of funding has been maintained, despite significant cuts to the council budget.
“Unfortunately on this occasion MHAGS did not put in a successful bid. However we have arranged a £5,000 rent reduction for them to help off-set their previous £10,500 grant.
“We fund South Yorkshire Funding Advice Bureau to work with charities and are happy to continue discussions with MHAGs about where they might best find future funding. We fund other charities providing mental health support. The council also joined its mental health budget with health services this year to make sure services are funded which meet local needs.”