The Government has ditched its £3.3m support package for community pubs and a further £1m grant for the Pub is the Hub scheme as part of its cost-cutting programme.
John Healey, in Labour's short-lived post of Pubs Minister, promised a £3.3m support package towards a three-year pilot programme of 50 community owned pubs through the Plunkett Foundation.
He also pledged £330,000 a year for three years to enable the Pub is the Hub scheme to rollout on a national basis in both urban and rural areas.
It would have enabled Pubs is the Hub to employ seven full-time advisors across the country.
The grants will be replaced with a guidance leaflet for the 2,500 communities who face pub closures each year.
The cuts come despite David Cameron pledging new resources to help local people take over community assets such as pubs under the Big Society.
He said Government officials would be made available to help community groups that want to run pubs and communities would also get help to identify and fund a "community organiser" for such schemes.
One industry leader said the trade had never relied on the money coming in. "We always knew it was a bit of an empty political gesture."
The Plunkett Foundation slammed the cut as "devastating news" and has called an emergency Co-operative Pub Summit to discuss how communities can best be supported in buying community pubs.
Another chunk of £7m worth of funding pledged by the co-operative movement is also under threat from cuts.
Despite no formal launch, 82 communities had already contacted Plunkett about buying their pubs.
"The Government has turned its back on communities who were looking to take more responsibility over their everyday lives," said Plunkett chief executive Peter Couchman.
"The scheme was based on bringing together the expertise in the co-operative movement which currently helps to save ten percent of all village shops facing closure."
"While we appreciate that an important driver for the government is reducing the deficit, we can't leave these people stranded by this decision and we are determined to help if we can.
"The summit will look at how the expertise and resources from the co-operative movement can save some elements of the scheme without the Government. We don't know how, but we are determined to try."
He added: "Communities owning and running their local pub has been used by the Prime Minister constantly as an example of the Big Society at its best. If communities are to take control of the problems they face then they are going to need help and advice to stop them having to reinvent wheels. Promised legislation for a Community Right to Buy is very welcome but without proper support it will be a Community Right to Fail."
Not the end of the world
Pubs is the Hub director John Longden took a more positive view. He said the diversification scheme would continue to grow on organic basis but would have to scale back plans for the national rollout.
"Obviously we are disappointed — it would have been nice to have it — but it is not the end of the world," he said.
"Pub is the Hub will continue to develop where there are local authorities and counties who have sympathy for providing pub is the hub grants.
"We have helped 30 communities buy their pubs, including six since John Healey's announcement, and funding has not actually been the problem.
"People need help with the actual running of the pub and we will continue to provide that help and advice on diversification."
Longden also pointed out that communities did not necessarily have to buy the freehold of the pub and could take a lease instead and "benefit from support from the pub company".
He added: "We are disappointed but we appreciate the financial environment we are in and understand the Government has to make hard decision on where best to use funds."
Local Government minister Bob Neill said: "The new Government has axed the unfair cider tax, is stopping loss-leading sales of alcohol by supermarkets, will be making it easy to play live music and is to give local communities new powers to save local pubs.
"Pubs are a vital part of the fabric of community life. Pubs don't want state handouts — but they do want to be able to compete on a level playing field, without reams of red tape preventing them from making a living."