An international music festival is set to be axed after supporters dumped it for the Olympics.

The UK's biggest celebration of hip hop needs to raise £40,000 at the eleventh hour if it is to go ahead after the Arts Council pulled its funding.

The national organisation has funded the Brighton Hip-Hop Festival (BHHF) for several years but has turned down this year's £30,000 bid to divert its cash to the London 2012 Olympics.

Now organisers fear the fortnight-long event which attracts 20,000 people from around the globe will have to be dropped - and may never be held again.

Director Indy Hunjan said she will have to decide next week whether to pull the plug on the festival.

It was due to start later this month and involve hundreds of artists from across the world.

The celebration of hip hop costs £42,000 to stage but Kala Phool, the volunteer agency behind it, only has £2,000 so far.

The Gardner Arts Centre in Brighton was forced to close earlier this year in part because of cuts from the Arts Council.

Other major city events have also expressed concern about funding, but none would speak publicly.

Ms Hunjan said: "The Arts Council was our main source of funding but it was also a lever for getting money from elsewhere.

"It has put the whole future of the festival at risk.

"If we don't go-ahead this year we won't have another festival because we won't be able to attract the sponsors.

"Last year we had 700 artists and 20,000 people and yet the Arts Council says it is not strategically important.

"I defy them to find another group which defends this kind of vulnerable sector like we do.

"The arts funding system in this country is dying on its feet."

She said Brighton had become a Mecca for hip hop fans and gained world-wide recognition on the music scene.

Ms Hunjan added: "We are still feeling very raw about this and are emotionally exhausted.

"I desperately need people from the community and beyond to help.

"There is enough money here in Brighton and people love what we do but they aren't willing to come forward.

"There are all these hip hop nights and people love having their picture taken by the graffiti.

"People must think it just happens but it takes a lot of hard work and we're all volunteers."

The average spend for a day visitor in Brighton and Hove is £18, leaving the city's economy hundreds of thousands of pounds in the red if the event does not take place.

Roger Marlowe, of Brighton and Hove Hoteliers' Association, said the loss of the festival would have huge implications for Brighton and Hove.

He told The Argus: "Although we might lose a bit of business, I think we stand to lose more in reputation as a city.

"Brighton is an alternative arts and culture centre and to have a hip hop festival is a truly wonderful.

"It is something you can't really imagine in Burgess Hill, Worthing or Slough.

"It's an event that suits Brighton and brings us great publicity. Brighton should be a city of festivals."

Tony Mernagh, the executive director of the Brighton and Hove Economic Partnership, said: "If it is true, and the Olympics is impacting on grants to these events, it is very unfortunate for the city, although the Olympics is a huge event both th the nation and the South East.

"Brighton and Hove has a reputation for being able to give a cultural offering to a wide range of interested parties and it would a great shame if an event which is aimed at the youth culture is cancelled."

BHHF was launched three years ago and has become a highlight of the hip hop calendar.

This year was supposed to be the biggest and most ambitious yet.

The programme includes the Fresh Styles hip hop film festival, poetry and MC shows, youth workshops in music production, MC-ing, DJ-ing, break-dancing and street art jams.

It is set to culminate with Live Day, a free event showcasing established and emerging artists.

Hove DJ Norman Cook praised last year's festival and said: "The Brighton Hip Hop Festival is a fantastic initiative.

"It brings together all that's great about Hip Hop and provides inspiration and opportunities for the whole local community.

"It involves loads of ridiculously talented artists and 2007 will be better than ever."

David Samuel, from leading hip hop organisation RareKind added: "Brighton's a very cultural city, so things like this shouldn't be a rarity. This should happen all the time."

The festival is a celebration of hip hop culture which supports underground, regional and national artists.

It tries to promote hip hop in a positive way and challenge negative stereotypes linked with it.

If it goes ahead, it will run between June 28 and July 14.

A spokeswoman for the Arts Council said she could not comment on why the bid had been rejected but added that half of all applications are refused.

Events at the Pavilion Theatre, Riki Tik, Concorde II and Komedia have been planned.

Anyone who can help should contact Ms Hunjan on 07977 449052 or email indy@kalaphool.com