The Department of Culture, Media and Sport confirmed that £5m of CABE's annual funding had been withdrawn, leaving it with approximately £7m from the Department of Communities and Local Government which is yet to make a decision.
A representative from DCMS said: "Unfortunately the state of our public finances dictates that difficult choices had to be made. The most pressing need is to protect and maintain other parts of our culture and heritage."
"We shall continue to discuss future arrangements with CABE," they added.
Meanwhile CABE said it was "bitterly disappointed" with the decision:
"The organisation has worked hard with Government in recent months to create low-cost ways to ensure that people can still get the practical advice and support they need to create a good quality built environment.
"The quality of housing, public buildings, streets and parks has a major impact on everyone's life, every day. Indeed, the quality of your local neighbourhood matters even more in tough economic times. So it comes as a surprise to see that no resources have been found from the Culture programme to deliver the Government's commitment to this area of public life."
CABE chair Paul Finch said:
"I would like to pay tribute to the huge efforts made by staff and commissioners over CABE's first life. We are very proud of our achievements so far, from the high profile design reviews of the Olympic facilities for 2012 to the less well known support to planning teams and developers up and down the country as they try to create places that look good and work well for everyone. I know there are literally thousands of new buildings, parks and streets which are better because of CABE's support.
"I believe the reasons for that work remain and will become ever more relevant to the future of this country."