The Surrey Tamil School, at Coombe Boys’ School in College Gardens, will only receive £2,500 funding this year, despite being told in May 2013 it would get £4,000 annually until 2015.
Kingston Council reviewed its £1.5m culture and language organisations funding and will now only support one organisation per language in the borough.
But the council gave £9,000 to rival Kingston Tamil School at Tolworth Girls’ School – £3,000 less than last year.
Surrey Tamil School’s chairman of governors S Tharapayan wrote to Kingston Council leader Councillor Liz Green.
Mr Tharapayan wrote: “The news of your decision to make a full u-turn on the previous written commitments came as a deep shock and we find it extremely hard to comprehend.
“Our school has become the victim of the recent unfair policies of the Liberal Democrat administration, which will no doubt have a major impact on the excellent services that we have been providing to our community for the last five years or so.”
Councillor Green said the three year funding arrangement had only been agreed 'in principle', adding the school was welcome to apply again next year.
Coun Green said: “Because Surrey Tamil School had received funding before, we did not want to drop them off the cliff edge, which is why we gave them £2,500.
“We just cannot afford to fund two Tamil schools to the detriment of other community organisations we support.
“They weren’t the only ones not to get what they would have liked.”
Councillor Howard Jones, leader of the Conservative opposition, said: “If you are going to give the money to one school and not the other because you class them as the same culture, what you are not taking into account is that they may be from different backgrounds with competing interests.
“I don’t think the judgement was right.”
Lib Dem Councillor Yogan Yoganathan said: “I abstained from the vote because it did not make good across the whole of the community language schools. There was no consistency in dealing with all the language schools.
“There was also no opportunity to look into the surpluses already at these schools – some of them may have a significant amount.”
Conservative Councillor Gaj Wallooppillai, who is of Tamil heritage, said: “This will be viewed by all residents as a step backwards in inter-community relations.”