Fewer young entrepreneurs in Kent and Medway are setting up in business after the regional development agency axed its £120,000 grant to The Prince’s Trust.

The Trust in the south east faces a funding crisis following the South East England Development Agency’s (SEEDA) controversial move, described by one senior official as "a travesty."

Two years ago, the Trust, founded by Prince Charles to help young people, many from disadvantaged backgrounds, was supported by a national contract with the Department for Work and Pensions (DWP) worth up to £6 million, of which £460,000 came to the south east.

But the deal ended when the Treasury, then run by Prime Minister Gordon Brown, handed over funding responsibilities to regional development agencies.

While most other RDAs continue to fund Trust activities, SEEDA is among a few that have stopped the payment, forcing the regional Trust to slash the number of young people it can help.

A national newspaper recently reported that Trust founder Prince Charles was so upset by the funding changes that he had complained to Mr Brown.

The business programme, which this year celebrates its 25th anniversary, aims to help young people to set up their own enterprise through grants, loans and expert advice. Hundreds have been set up across the county over the past few years. Statistics show they have a better chance of success than other start-ups and many have gone on to become highly successful.

But financial problems have cut the number of business start-ups aided by the Trust across the region from 272 in 2005-06 to 107 in 2007-08. The Trust says it hopes to help 130 this year, but much will depend on whether the private sector, which already gives generous support to the Trust, can make up for the shortfall.

South east regional director Simon Fulford said: "SEEDA is the lead RDA on enterprise yet it doesn’t seem to want to be willing to invest in the enterprise aspirations of disadvanted young people and I think that’s a bit of a travesty."

He said he had tried to persuade SEEDA, including chairman Jim Brathwaite, who has come under fire for spending £53,000 on taxi fares. to reverse its decision, but without success. "We’ve been extremely frustrated with the response we’ve had from SEEDA," Mr Fulford added.

"I’m truly disappointed. I have the staff capacity to do a lot more and I might either have to redirect their time and efforts to other support for young people or we look at whether we can sustain the programme infrastructure."

A SEEDA spokesman said it was still working with the Trust but added: "The South East has a range of complex skills and employment issues which compete for our support and we have to strike a balance between direct funding and leveraging support from other regional partners to adequately address them."