The centre is being closely studied by other immigrant groups. Sponsored by the Moroccan government, among others, it provides basic literacy courses for Africans who would otherwise not get into further education.
Managers at the Moroccan Enterprise and Training Centre in west London expect Kensington and Chelsea College to cut its support at the some time as money from the Government's Inner City Challenge dries up in March 1998.
The centre, which was launched four years ago, received almost Pounds 100,000 of its Pounds 250,000 in free rent and salaries last year.
But Elizabeth Haynes, general manager of the METC, said prospects for the future were bleak following talks with the college.
"It's been made clear to me that college support will be drastically reduced, " she said. "The METC will either have to move from the college or it will become a small department within the college itself."
Prospects may be even worse. Without firm financial backing from the college, which gets Further Education Funding Council cash for the 400 students on METC courses, the centre is unlikely to attract money from outside agencies to replace the funding from the City Challenge project.
The Moroccans would be less likely to enrol for courses if the centre was a small college department, said Ms Haynes. In any case the college was also set to withdraw support since it wanted the premises back.
Chris Sadler, vice-principal of the college and chair of METC's board of directors, accused Ms Haynes and Moroccan representatives of jumping to conclusions.
Isabel Wade, business development officer at North Kensington City Challenge, said a review was necessary because the FEFC was cutting support for outside agencies. "The college cannot afford to put more money into an agency than it gets out of it," she said.
The latest Treasury threat to cash for growth is expected to make prospects even worse.