The Government will refuse to provide further public funds to a children's charity unless its high-profile head steps down, according to reports.
Kids Company chief executive Camila Batmanghelidjh is under pressure to quit over concerns about how the charity is run, with ministers holding back £3 million of funding unless she goes, BBC2's Newsnight and Buzzfeed said.
Ms Batmanghelidjh told Buzzfeed: "At this stage, I'm not at liberty to comment. I have to safeguard the provision for the children and the staff."
The charity was founded by Ms Batmanghelidjh in 1996 and provides support to vulnerable inner-city children, young people and families.
The BBC said the charity's latest accounts show it relies on the Government for £4 million of its £20 million funding.
Newsnight reported that, in order to meet the Government's funding ultimatum, officials have suggested Ms Batmanghelidjh should take the non-executive position of "president".
David Cameron, who has shared a platform with Ms Batmanghelidjh in the past, has previously defended the charity's funding against efforts by ministers and officials in the Cabinet Office and Department for Education to cut it or intervene, the programme said.
Officials indicate that Justice Secretary Michael Gove and Chancellor of the Duchy of Lancaster Oliver Letwin have supported a tougher approach to the charity.
A Cabinet Office spokeswoman said: "'Making sure that every child has the best start in life is our top priority, so we will continue to work with Kids Company to ensure its important work is sustained."
The development is the latest blow to hit the charity. In March, Kids Company's interim finance director, head of human resources and director of development all resigned amid claims of concerns about its funding and "high levels of stress within the workplace", the Sunday Times said.