A centre to help people with mental health problems will be forced to close after Stoke-on-Trent City Council refused to fund it.
The charity Mind, which runs the Bentilee project, applied to the council for funding.
Social service chiefs said the project, run by two people, did not qualify for the cash.
The six-year-old scheme was set up after the charity received £600,000 Lottery funding.
A council spokesman said the charity had applied to the council's social services department and the city's primary care trust for funding.
Council apology
"An executive decision was made by the director of social services to refuse a request for financial help for the project," he said.
Chris Brabbs, director of social services, apologised to staff at the centre for not keeping them informed about the funding for the project.
"We should have kept them informed of how and when that decision would be made.
"Staff within that department know that a key principle is to treat people how we would want to be treated ourselves.
"Clearly that didn't happen on this occasion and we are very apologetic."