A charity which supports lesbian, gay, bisexual and transgender (LGTB) homeless young people is withdrawing its services from Brighton and Hove.

The Albert Kennedy Trust, which has an office in Ship Street, Brighton, has announced it cannot carry on after the city council rejected an appeal for £20,000 to keep it going.

The trust, which provides foster care and lodgings to young people, said it cost £40,000 a year to run the charity. It has been funded by Comic Relief for the past three years but that grant ended on March 31.

The trust is committed to using donations and its reserves but hoped to get funding from the council.

Richard McKendrick, chief executive of the trust, said: "Brighton and Hove City Council has always purported to be at the forefront of service development for those in need from the lesbian, gay, bisexual and trans communities. This decision is a huge setback."

The charity said the decision to close was made harder because it had only opened its part-time office in the city last November.

Its aim was to work with other members of Brighton and Hove's LGBT community to influence the council's housing strategy.

The trust and the council were also part-funding research by Hove YMCA and the University of Brighton LGBT group on youth homelessness in Brighton and Hove, which will be published on June 22.

Paul Turner, a trustee, said: "The decision is a real setback for our work.

"It would be great if the council would reconsider its decision and release the necessary funds to enable the work to continue."

The trust will support young people already placed in supported lodgings but will not provide any new placements or mentoring.

A spokeswoman for Brighton and Hove City Council said: "This is the first time they have applied for funding and their bid was not prioritised. One of the council's rules on grant funding is that no more than 25 per cent of running costs should be funded and The Albert Kennedy Trust was asking for 50 per cent.

"As the council's grants budget is three times over-subscribed we have to set limits. We already fund various organisations that support the LGBT community, including Allsorts which performs a similar role in supporting young people, the LGBT switchboard, Pride and housing advice centres.

"However, the council appreciates the work they are doing and have offered them help in looking for alternative funding."