Charity Kids Company is set to close – shortly after it received a £3 million grant from the Government.
The organisation works with 36,000 vulnerable children and young people, and officials, charities and councils have been in discussions preparing for the impact the closure could have.
The youth organisation has been hit by allegations of bad financial management, prompting its high profile founder Camila Batmanghelidjh to quit as chief executive.
Ministers agreed to give the extra cash to help restructure the charity despite objections from a senior civil servant who warned they did not think it would be "value for money".
Southwark Council, in south London, where many young people work with the charity, said: "We have been in discussions with the Department for Education and other local authorities, preparing for the closure of Kids Company.
"Although Southwark doesn't refer any children to the charity, some will have sought out their services. We are ready to support any vulnerable children and young people in the borough who are affected by the closure of Kids Company."