The UK Film Council is to be axed as part of a cost-cutting drive by the Department for Culture, Media and Sport (DCMS), it has been announced.
The organisation, founded in 2000, had an annual budget of £15m to invest in British films and employed 75 people.
Culture Secretary Jeremy Hunt said he wanted to establish a “direct and less bureaucratic relationship with the British Film Institute”.
UK Film Council chairman Tim Bevan called it “a bad decision”. He said the announcement was “imposed without any consultation or evaluation”.
“People will rightly look back on today’s announcement and say it was a big mistake, driven by short-term thinking and political expediency,” he said.
The DCMS said film funding would continue but would be distributed through other bodies.
Current lottery funding for film is £26 million per year. This is expected to increase to £32 million after 2012.
Direct government funding, currently about £25m a year, is being considered as part of the ongoing spending review.
In a statement, the DCMS said it was “clear that culture and creative industries will not be singled out as a soft target, and that the government will champion the value they bring”.
The Film Council was set up by the Labour government to develop and promote the British film industry.
Funded by the National Lottery, it channelled about £160m into more than 900 films over the last 10 years, including Bend It Like Beckham, The Last King of Scotland, Gosford Park, The Constant Gardener, Vera Drake, Man on Wire, Bend it like Beckham, Fish Tank, In the Loop, Nowhere Boy, This is England, Touching the Void and Tamara Drewe.