A unit set up to help victims of hate crime faces being scaled down after the Government withdrew its funding.

The police Anti Victimisation Unit (AVU) was set up last year to tackle the crisis of confidence felt in marginalised communities about the ability of the police to respond to hate crimes.

Last night, James Ledward, chairman of the safety forum for the lesbian, gay, bisexual and transgender community, resigned in protest.

The unit, based at the police station in John Street, Brighton, was given £1.2 million Home Office funding.

Eleven dedicated police officers work in the unit, concentrating on tackling homophobic attacks, race hate crimes, and domestic violence.

Organisers were hoping the project would receive more Home Office money to extend it until March 2003.

But the Home Office has decided to stop funding the unit.

Mr Ledward said: "We were misled. It is not acceptable to get people's hopes up and get communities involved like this.

"We worked extremely hard to build trust and confidence with the police.

"It is just not good enough to spend £1.2 million of public money and then pull the plug."

Mr Ledward, who last night stepped down in protest at the move, said the unit would have to be slimmed down.

Speaking at the group's annual general meeting, he added: "The issue is one of priorities. Do we want a safe city or a culture capital?"

Superintendent Doug Rattray, head of Brighton and Hove police, confirmed the Home Office funding was being withdrawn.

He said the force would fill the budget gap to pay AVU officers and to maintain a hate crime unit and the city council was looking at ways of finding finance.

He said it was vital the expertise built up by officers was not lost but the decision could mean redundancies among civilian staff.

The AVU had been enormously successful in building confidence with victims of hate crimes and he was disappointed with the Home Office decision.

Police had been led to believe there would be a "soft landing", with funds gradually withdrawn.

Anthea Ballam was named as Mr Ledward's successor.