Pride organisers claim they could have to scrap its parade if council funding of £25,000 is cut.
Tens of thousands of people line the route as floats travel from Brighton seafront to Preston Park during the annual LGBT celebration.
However, community campaigners claim the parade is at risk if Brighton and Hove City Council scraps the annual £25,000 grant after the 2013 event.
But town hall bosses strongly reject any suggestion that they are doing anything to jeopardise its future.
James Ledward, a director of the community interest company that runs the festival, said the council grant would be devoted exclusively to funding the parade.
He said: “In the context of what the council pays to external community development consultants £25,000 is in real terms peanuts and amazing value for money.
“Here is an event that has a proven track record of bringing millions and millions of pounds of finance into the city for what is a piddling amount of money.
“It is becoming harder and harder to pay for the parade and this would help safeguard it.
“I would like to know where the priorities are with the cutting. Will the Brighton Festival be asked to lose similar amounts?”
The proposal to cut the funding is part of the local authority’s budget, which will be decided at a meeting at the end of this month.
The £25,000 sum for 2013 will be paid for through reserves but after that it will be scrapped.
Geoffrey Bowden, the chairman of the council’s culture committee, said officials were working closely with Pride organisers to ensure the long-term future of the event.
Support from the council has included not charging the organisers to use Preston Park and Madeira Drive and fees were waived for suspending parking bays and cleaning on the parade route.
Coun Bowden said: “We have had a number of very positive meetings with the Pride organisers in recent months and they have not so far indicated that the viability of the event is in question.”
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