Doctors say they fear government departments may "raid" research funds, potentially hampering the development of new drugs and treatments.
The two publicly-funded medical research bodies are due to merge
The Medical Research Council and NHS Research and Development programmes are due to merge under plans being drawn up by a Treasury-commissioned review body.
The new body is guaranteed £1bn, but a remaining £300m may be divided between government departments.
However, the Treasury said the budget would be shared, not cut.
The government-funded MRC and NHS research programmes are responsible for over three-quarters of the non-pharmaceutical industry funded research carried out in the UK.
Between them, they fund projects looking at ways of treating and preventing disease, as well as more general research into understanding more about how the body works.
The Cooksey Review is still taking evidence, and is not due to report until the autumn - with the new body expected to come into force next year.
It has already suggested the joint research body will get £1bn, but the rest may be shared between the Department of Health and Department of Trade and Industry.
The British Medical Association fears that if the money is handed to government departments it will get swallowed by other projects.
Doctors said this is happening at a time when the NHS is already strapped for cash - nearly a third of trusts failed to balance their books last year - and research pots were at risk of being raided.
Professor Michael Rees, chairman of the BMA's medical academic staff committee, said: "Health research is vital to patient care and the development of new treatments, as well as providing economic benefits.
"In no way should it be diminished. It would be disastrous if the merger led to a reduction in investment in research."
And the MRC said: "The UK has an outstanding track record in health research, and has, for its size, one of the world's strongest non-profit health research programmes.
"A primary concern of the MRC, shared by many others, is that existing strengths in UK health research should be maintained, and developed with at least the same degree of innovation, commitment, and resource as in the past."
But a spokesman for the Treasury said a final decision had still not been made.
"It is wrong to suggest the budget may be cut. It is just a question of who should get the money.
"All the concerns will be taken into consideration."