Council bosses have been accused of turning their backs on deprived housing estates being regenerated with millions of pounds from Whitehall.
Five years ago ministers announced £47.2 million of funding for east Brighton, to be administered over ten years by a new organisation called eb4U.
But the Government is witholding some of the cash, meaning eb4U has been forced to cap funding for 40 community projects and stop funding for many more.
As a result, many organisations are finding they cannot survive.
Brighton MP Des Turner told a meeting of the Whitehawk Crime Prevention Forum the council appeared to be undermining the principle that the eb4U money was supposed to be in addition to council funding and not instead of it.
He said: "I know they have been looking at every opportunity not to spend money in the eb4U area."
But Brighton and Hove City Council hit back at the criticism, saying it was totally unrealistic to expect council-tax payers to pay for east Brighton's regeneration when the Government money ran out.
A council spokesman said: "The council recognises the impact the end of eb4U funding may have and will be working on an appropriate strategy to continue the momentum in east Brighton.
"The problem of funding coming to an end for specific projects was always likely to be an issue, even though organisations were aware they were being funded for a specific number of years and should have been making alternative arrangements."
The money is being spent on health, education, employment and community facilities in Whitehawk, Moulsecoomb, Manor Farm, Bates Estate and Saunders Park.
It has been given in tranches for the past four years but this year the Government announced it was capping the cash - meaning that although it will all arrive by the end of the ten-year period, funding has been reduced for this year.
eb4U has been forced to cap its funding for projects it supports, including Whitehawk's Valley Social Centre.
Funding for the Moulsecoomb Neighbourhood Trust (MNT) and the Whitehawk Play and Adventure Project ended on March 31 and they have been forced to close most of their services.
The MNT received a £27,000 emergency grant from the council but it was too late.
Bob Christofoli, a former councillor and a member of the Whitehawk and Manor Farm Community Association, which runs the Valley Social Centre, said: "To expect eb4U to provide all the funding is wrong. We feel the local authority has opted out."
Council leader Ken Bodfish is seeking a meeting with the resident chairman of eb4U, Alan Teague and its director, Graham Maunders, to discuss the situation.
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