The Ministry for Children and KidsCan are at odds over whether the children's charity will have its funding cut.
The charity had hoped to provide basic needs to 70 more schools next year, but chief executive Julie Chapman told The AM Show it may now lose its $350,000 funding by June.
Ms Chapman said she received a phone call from the ministry telling her the funding would be cut, but Children's Minister Tracey Martin is adamant no final decision has been made.
Ms Martin says the children's charity has known its funding was time-limited, and added that her ministry hasn't actually made a call on funding KidsCan yet, as it is yet to put forward Budget bids for 2018-2019.
"For the last two years, this particular funding has been coming from the Prime Minister's fund, and that ended," she told The AM Show on Wednesday morning.
"The National Government did not actually extend this funding past this period of time."
But Ms Chapman says KidsCan was placed under baseline funding two years ago, which had, she thought, given them an additional layer of financial security.
She says thousands of children will miss out on basic needs if it loses Government funding.
"[We're] frustrated and surprised this decision has been made," Ms Chapman said.
"It certainly wasn't one that we were expecting, given that our funding's been in place for the last nine years."
While Ms Martin lays the blame at the feet of the previous Government for not allocating ongoing funding, National's Paula Bennett has accused the new Government of axing a program specifically aimed at helping kids who need it most.
"This is another example of Labour's ideological stance against partnership models. KidsCan is a shining example of how corporate and public funds combined can achieve great outcomes," she said.
"I implore the government to rethink this terrible decision."
But Ms Martin said Ms Bennett's previous National Government had not allocated any money for KidsCan after June.
"My understanding is that Oranga Tamariki informed them that it would not be seeking new money for them in the budget. That was an operational decision by the ministry," she said in a statement.
"I've only just become aware of this issue and I have asked officials to provide me a briefing on this relationship and the funding issues.
"This Government values organisations that provide real help to children and KidsCan has obviously done some great work with a lot of kids."
Ms Chapman told RNZ she had been told a week ago that the funding, worth $350,000 a year, would end on July 1.
"There's going to be quite a big impact on our ability to get the support to kids in need," she said.
Oranga Tamariki says no final decisions have been made about future funding.
NZN / Newshub.