A small, independent publisher is to sue Arts Council England over the ending of its funding. Dedalus accuses the council of failing to follow its own “disinvestment guidelines” for giving clients ample warning if their grant is to be withdrawn.

The Cambridgeshire publishing house, one of the council's smallest clients, received only £24,958 for 2007-08, but depends on the money for survival. While cuts to theatre funding have been well publicised, Dedalus is just one of a number of publishers, particularly in the field of translated literature, that have been hit by big cuts.

Eric Lane, its founding managing director, said that the council had failed in its duty of care, depriving the company of any chance to evolve a survival strategy without the grant: “We could go bankrupt very soon.”

News of the decision has shocked the literary world. Julian Barnes, Marina Warner and Ali Smith are among writers who have expressed their dismay to Dedalus. More than 800 people have signed an online petition on its behalf.

Arcadia, another specialist in translated fiction, has received its £42,000 grant for this year and next, but has been told that it will then have to bear a 25 per cent cut after. Anvil, a poetry publisher with a strong translation list (and which nurtured Carol Ann Duffy) is understood to have received an immediate cut.

The British Centre for Literary Translation, founded by W.G. Sebald in 1989 and based at the University of East Anglia, has received conditional funding for only one year, despite recently receiving public funds to draw up a three-year business plan.

Its director, Amanda Hopkinson, said: “Right now, we are wondering quite what the purpose was of this investment if we are not to be enabled to survive beyond this or the next financial year.

“The lack of joined-up thinking in a country where there is now a greater linguistic diversity than ever before and where there is an established demand to be aware of parallel cultures in the globalised world of the 20th century is staggering.”

Mr Lane said: “As a small publisher [Dedelaus is] a symbol of what must not be allowed to be destroyed - an independent voice or, as Stephen Calloway, the author, put it, ‘a national treasure in a sea of mediocrity'.”

He said that Dedalus had been given every indication that its funding would be continued.

Explore Books

• Book Extracts

• Book Reviews

• Books Group

• Audio Books

Times Recommends

• The Sunday Times 100 best holiday reads
• What will we be reading this summer: the booksellers predict
• Literary festivals: a survivor’s guide