The Government has withdrawn nearly £2 million of funding for the county's police community support officer scheme.
Sussex Police Authority has been forced to reduce the number of PCSOs it was planning to recruit across Sussex this year.
By the end of this year, they had planned to bring the number of officers in the county to 525 but this figure has now been reduced to 270.
The authority has responded with "frustration" at the news and said it is unlikely the £1.8 million reduction in the Home Office grant will be diverted elsewhere within the force.
Authority chairman Peter Jones said they would struggle financially from 2008 onwards because of a lack of funding and would have to make "significant changes to how the Force is run".
He said: "If, as we expect, existing funding levels are cut in the medium term, it will be a struggle to meet cost increases essential to maintain current services let alone invest in other crucial areas such as major crime, road policing and counter terrorism, which we are charged by Government to develop following the collapse of its ill-fated force-merger proposals.
"People have indicated to us they would be prepared to pay more council tax for their policing but we really don't want to do that.
"We have delivered savings worth nearly £20 million this year alone.
"It is high time Sussex's position as a poor relation in policing terms was addressed by Government and the £6 million plus gap between us and the average shire force closed."
A spokesman for the authority said it was too soon to say where efficiency savings and cost cutting might be made.
Community support officers were introduced in 2002 to provide extra police presence on the streets.
Earlier this year, The Argus revealed they were being placed in schools in a bid to improve safety.
Brian Stockham, chairman of Sussex Police Federation, said the PCSOs provided a valuable but "limited" service.