Up to 50 Edinburgh scientists may lose their jobs and key research facilities will be put at risk as a result of budget cuts, a union has warned.
The ATC is one of three organisations at the observatory
Staff at the Royal Observatory's Astronomy Technology Centre (ATC) are being offered voluntary redundancy and may face compulsory job loses.
Scientists' union Prospect said the centre would be affected by a shortfall for research projects across the UK.
ATC director Ian Robson says closure would be terrible for the sector.
Infra-red and radio telescopes are built at the ATC.
Mr Robson said: "We are the world leader in building facility-class astronomical instrumentation - telescopes, instrumentation that goes on telescopes - that's our mission, that's what we've been charged to do by the government.
"Science in general has done quite well compared to other areas of government, but as far as we're concerned this is a semi-disaster altogether - in fact a total disaster."
Union representatives are calling on the newly-created Science and Technologies Facilities Council (STFC) to rethink plans to cut research programmes.
Prospect said the council's budget for 2008/11 had allocated £80m less than expected for scientific research.
As a result, the union said research programmes would be cut in Edinburgh and at laboratories in Daresbury and Rutherford Appleton, in England.
The UK Astronomy Technology Centre in Edinburgh is the national centre for astronomical technology.
It is involved in the design and construction of many of the world's major telescopes, which enable research into the origins of the universe.
Two major projects which are expected to end are the Gemini Project, an international collaboration to build a space telescope in Edinburgh, and the Fourth Generation Light Source project, which looks at the use of light in the diagnosis of medical conditions.
Prospect believes hundreds of scientists could be made redundant across three UK sites as a result of the changes.
The union's national secretary, Tony Bell, said the cuts signalled a bleak future for UK scientific research.
He said: "The country looks set to lose areas of scientific research vital to our understanding of the world.
"We will lose a team of scientists in astronomy, physics and particle physics.
"These are top scientists in their field. Teams such as these would be impossible to recombine if broken up.
"In terms of the loss of an infrastructure for science, it will be very bad. These cuts undermine the future of scientific research."
Mr Bell said the council was currently looking for another partner to take over the Edinburgh plant, but added that the centre could face closure if one could not be found.
He said that staff did not understand the council's decision or its vision for the future.
He said the union would be seeking further meetings with the STFC board and other stakeholder bodies to urge it to revise the planned programme of cuts.