The warning came after a YouGov poll commissioned by the umbrella group found that more than two thirds of the public believe that Lottery funding should be preserved for good causes, and not be used to meet the increased cost of the 2012 London Olympic Games.

The poll was carried out to establish public feeling following reports that Chancellor Gordon Brown is planning to divert £1.9 billion from the National Lottery good causes fund to the pay for the Olympics

Speaking at a press conference held at the NCVO annual conference, chief executive Stuart Etherington said: “I think this is the biggest threat to the funding of smaller independent organisations that I can remember.”

He also offered a warning to the government that charities would turn against it if the diversion of funds goes ahead, despite a decade of working together. “We have had the Compact and we have had a change in the law,” Etherington said. “At a stroke the confidence that the sector has shown in the government, and its willingness to work in partnership, would be severely damaged.”

NCVO is now set to lobby the Chancellor to find the money to plug the Olympics shortfall from the public purse.