Wrap said in a statement, however, that the money from the Department for Environment, Food and Rural Affairs (Defra) was still a "substantial sum" to deliver its "important and stretching" work programme.

Around a quarter of Wrap's funding comes from the devolved governments in Northern Ireland, Scotland and Wales. Their contributions should take its total budget to an "anticipated £60m".

It's unclear how this will affect the recycling rates for the paper and packaging sector. The Confederation of Paper Industries (CPI) said this month that paper recycling already exceeds even the recent increases that scheduled targets up to 2012.

Wrap chief executive Liz Goodwin announced last December that the organisation faced a possible 25% budget cut that would need to a "net reduction" in jobs.

It cut 31 positions on 5 February, but said it would create 18 new posts.

Wrap said it would now "review its priority areas", but it was too early to provide more details of the impact of the budget cuts.

The Business Resource Efficiency and Waste (Brew) programme also takes its funding from the £43.2m budget.

Wrap received a total of £67.7m in grants in 2006/7, down from almost £80m in 2005/6.

Defra also said the Carbon Trust would receive £47.4m to be partly used to increase its Energy Saving Loans scheme for small and medium-sized companies.