A decision to axe thousands of pounds from charities and voluntary groups will not be revised, councillors have decided.

An East Sussex County Council scrutiny committee agreed the £138,000 cuts package should stand and the decision should not be sent back to the ruling Cabinet.

But councillors said the system for awarding grants should be improved and there should be better consultation with the voluntary sector.

Charities and voluntary organisations in East Sussex were angered by the cuts, which they said could jeopardise cash from other grant-giving bodies and translate into larger losses.

The social services scrutiny committee heard the council had only a vague idea of how many groups depended on council grants to unlock cash from other bodies - a system known as matched funding.

More than 30 organisations, among them the CAB's money Advice Service in Hastings, a YMCA-run group for teenage mothers in Eastbourne and the East Sussex Childminding Association, lost their entire grant.

Twenty other groups which applied for first-time funding got nothing, although the scrutiny committee was told there was no blanket ban on new applications.

Social services chiefs agreed the organisations which had lost money had been given very little notice but said they could not be informed earlier because the council's budget had not been finalised.

Lib Dem councillor David Tutt accused the ruling Conservatives, who have cut the social services budget by £4.1 million, of only funding groups which provided services similar to those affected by the social services cuts.

He said: "It is services on the cheap, for them to fulfil their statutory obligations, and a total disregard for the work the voluntary sector does."

Tory Keith Glazier, Cabinet councillor responsible for social services, said larger groups tended to win matched funding and the system did not help smaller groups.

He said many of the organisations affected should not have been funded from the social services budget, such as education-based groups, which had their funding cut by £55,000.

It was the first time a county council scrutiny committee, introduced as a check to the new system of Cabinet-style rule, has been asked to examine a spending decision.