A gay and lesbian arts centre has been forced to axe staff and cut services after it received a tiny fraction of the grant it requested.

Gay and Lesbian Arts and Media (Glam) submitted a £100,000 bid for three years' funding from Brighton and Hove City Council's main grants budget.

But the council's policies and resources committee awarded it a one-off grant of £3,750 for the three years.

Now the centre, in the Old Steine, Brighton, is considering moving out of the city as it believes other councils would be willing to provide more financial support.

Glam is a registered charity, set up in 1997 with £250,000 European money.

It offers the lesbian, gay and transsexual community training in digital media and has built up a portfolio of projects which raise awareness of gay issues.

Since the council's decision Glam has laid off two of its five staff, reduced the number of courses it provides and started charging for services that were free.

Lead project worker Dee Shelley said: "We did not expect to get all the money we asked for but we thought we would get a lot more than this.

"We are investigating alternative methods of funding but, because we are so unique, both an arts and a community organisation, we do not fit anybody's funding criteria. Our other option is to leave Brighton altogether."

A city council spokeswoman said the council had received 116 grant applications for the £2.1 million available in the next financial year, of which only 60 had been successful.

She said: "In a best-value review of grants, the council agreed with the voluntary and community sectors - including the LGBT community - to prioritise five areas, including tackling discrimination and community safety.

"LGBT organisations fall into these categories and grant funding in these areas has increased by 57 per cent.

"Glam receives considerable support from the council, including support in their bid for European Urban funding for £250,000. In the current year they have also received over £9,000 in grant aid from us, plus the £3,750 awarded in the last round of grants.

"The council remains committed to supporting LGBT organisations."