A deal to secure the funding of the Portable Antiquities Scheme has been scuppered at the last minute, according to sources close to the initiative.

The future of the scheme, which encourages the voluntary reporting and recording of archaeological finds, came under threat at the end of last year when the details of the government's Comprehensive Spending Review were announced.

The scheme is funded by the Department for Culture, Media and Sport (DCMS) via the Museums, Libraries and Archives Council (MLA), which is having to find savings of 25 per cent as a result of the spending review.

In addition, the £1.3m budget for the scheme was not ringfenced by the DCMS in its allocation to the MLA, which has so far refused to guarantee the scheme's funding beyond 2009.

The 2008-09 budget for the scheme has been frozen. This means a cut in real terms that has already led to the loss of three of the 49 posts attached to the scheme (the education coordinator for the scheme, a finds adviser and a finds liaison officer).

There has also been a £100,000 cut in non-staff costs and a capping of travel expenses for employees in the regions, which experts believe will undermine the work of the finds liaison officers. Last year, the finds liaison officers attended more than 1,000 meetings and had contact with 167 detecting clubs.

As the funding is not guaranteed beyond 2009, all the finds liaison officers employed in the regions have been issued with only a one-year contract for this financial year. Negotiations were under way at the beginning of the year to transfer full responsibility for the scheme to the British Museum, which currently runs the scheme on behalf of the MLA.

It is understood that the MLA and the British Museum had reached agreement on a deal based on £1.3m a year over a three-year period and for responsibility for the scheme to be handed over to the British Museum from 2009 - only for it to be vetoed by the DCMS.

Funding for the scheme beyond 2009 is now dependent on the outcome of a review which will be jointly conducted by the MLA and the British Museum, although the terms of reference for the review and the timetable have yet to be agreed.

Many in the archaeological community fear that the agenda behind the review is to cut funding for the scheme.

Mike Heyworth, the director of the Council for British Archaeology, said the question mark over the future funding of the scheme had already had a destabilising effect, and that further funding cuts could lead to a breakdown of the scheme.

He added that there was a danger that uncertainty about future funding could lead to partners in the regions withdrawing their funding and existing staff seeking employment elsewhere.

A spokesman for the MLA said that it and the British Museum shared the same goal, which was to secure the future funding of the scheme.

A spokesman for DCMS said he expected the findings from the review of the scheme to be put before ministers in time to make a decision about its future and funding from 2009 onwards.

Support for the scheme has come from all corners. An early-day motion was signed by 225 MPs; there have been debates in the House of Commons and House of Lords; 16 professors of archaeology have written expressing their concerns about the future of the scheme; and more than 2,500 people have signed petitions on the No 10 website.

www.finds.org.uk
PAS at a glance

Finds recorded on database:

2004-05 - 39,933
2007-08 - 77,537
% increase: 94

Attendance at outreach events:

2004-05 - 31,092
2007-08 - 53789
% increase: 73


Website hits:

2004-05 - 21m
2007-08 - 80m
% increase: 280