Charity Kids Company is set to close its doors despite recently receiving a £3 million grant from the Government, with potentially "devastating" consequences for vulnerable youngsters.
The organisation works with 36,000 children and young people, and officials, charities and councils have been in discussions preparing for the impact the closure could have.
The youth organisation has been hit by allegations of bad financial management, prompting its high profile founder Camila Batmanghelidjh to quit as chief executive.
Ministers agreed to give the extra cash to help restructure the charity despite official objections from a Whitehall mandarin who warned they did not think it would offer "value for money".
Esther Keller, director of services for Kids Company in Bristol, said she felt anger at Westminster and concern for the children who would lose out on support.
She said staff were told this morning that the charity would close within 24 hours, with the doors set to be locked for the final time at 5pm.
"Staff were asked to make sure their personal belongings were taken home because if the receivers came in they would lock the doors," Ms Keller said.
"I feel terrible sadness for the children and young people we have been working with for the past three years in Bristol. They will be hungry, they will be desperate because no therapists will be helping with their emotional state. It's going to be devastating."
Ms Keller, who said she was "absolutely gutted" by what had happened, was angry at the Government because Kids Company existed to "pick up the pieces" when youngsters were failed by the state.
The high-profile charity, which operates in London, Bristol and Liverpool, has been shaken by claims it has not properly managed its finances.
It received the £3 million grant from the Cabinet Office last week after agreeing, on the orders of the Government, to make changes in its leadership, management and governance.
But Ms Batmanghelidjh emailed staff within the charity last week to say they would be paid using some of the grant money, according to the BBC.
The BBC reported that the Cabinet Office is making plans to claw back the grant because it believes conditions attached to the use of the money were not met.
In a sign of official concerns about the funding for the charity, a senior Whitehall official took the rare step of requiring a written, direct order from ministers before agreeing to the latest lifeline for Kids Company amid concerns about how it would be spent.
Cabinet Office Permanent Secretary Richard Heaton told ministers: "The experience that this department has of the charity's management and capacity gives me limited confidence that Kids Company will successfully implement the changes they describe in their new restructuring plans while meeting the stringent conditions set out in the proposed new grant."
In their reply, Cabinet Office Ministers Oliver Letwin, the Chancellor of the Duchy of Lancaster, and Matthew Hancock said they are "very mindful of the inspirational work that Kids Company does" and decided to release the funding anyway.
Acting Labour leader Harriet Harman, whose constituency of Camberwell and Peckham is served by Kids Company, demanded a plan to ensure the vulnerable youngsters the charity works with are cared for.
She said: "Whatever happens to Kids Company, these children and young people must be protected and supported. Such vulnerable young people must not suffer as a result of the breakdown of Government confidence in Kids Company."
Ms Harman called for ministers to publish a full report showing details of the funding decisions made regarding the charity.
Southwark Council, in south London, where many young people work with the charity, said: "We have been in discussions with the Department for Education and other local authorities, preparing for the closure of Kids Company.
"Although Southwark doesn't refer any children to the charity, some will have sought out their services. We are ready to support any vulnerable children and young people in the borough who are affected by the closure of Kids Company."
A spokesman for Lambeth Council said: "We are aware of the concerns over the future of Kids Company and its work in Lambeth, and our priority is looking after the children and young people who rely on its services."
A lunchtime club and adventure playground run by the charity will be re-opened as soon as possible, the council said.
The charity also runs some after-school clubs in the area and the council has written to schools to ensure that affected activities will resume after the summer holidays "with a new provider if necessary".