The government has refused to make a special case to help a children's hospice which had £5.7m invested in one of the collapsed Icelandic banks.
Naomi House in Sutton Scotney, Hampshire, had the cash tied up with Kaupthing Singer and Friedlander.
Last week the hospice suspended its community outreach home service.
MP for Basingstoke, Maria Miller, had secured a debate in the Commons to ask for help, but was told no special case could be made.
Treasury minister Angela Eagle said during the debate on Thursday: "All of them are very worthy but not all of them tie in directly with objectives that we would normally expect public money to be used for.
"I am a great lover of cats. The national Cats Protection League is one of them. How would we distinguish between helping one charity, and another charity, in that context.
"Not in a way that could be seen to be fair legally," she said.
The hospice looks after terminally-ill children in its home county and also Berkshire, Dorset, the Isle of Wight, Surrey, West Sussex and Wiltshire.
A new £12m hospice due to be built next year for teenagers and young people is also under threat, Naomi House has said.
Speaker of the House of Commons, Michael Martin, had refused Ms Miller a debate in the Commons two weeks ago, saying it would not be "appropriate".
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