Shropshire Council said that from 2018 it is planning to reduce the budget by nearly 50 per cent from £234,950 to £135,000.
Money will be spent in six areas which the council has identified as having the greatest need – Shrewsbury, Market Drayton, Oswestry, Bridgnorth, Whitchurch and Ludlow.
But 12 other local joint committee (LJC) areas – such as Wem and Shawbury, Ellesmere, Shifnal and Sheriffhales, Albrighton and Bayston Hill which have previously received funding – are set to lose out on financial support completely.
Under the plans, Shrewsbury would receive £45,000, with the other five areas receiving £18,000 each.
The proposal is detailed in papers ahead of a meeting of the council's cabinet on Wednesday.
The report states: "The council has reiterated the need to make significant budget cuts.
"Working on the basis of a reduction to the existing budget from £234,950 to £135,000 the six LJC areas with the greatest identified needs – Shrewsbury, Market Drayton, Oswestry, Bridgnorth, Whitchurch and Ludlow – would be allocated funding.
"This compares with eighteen LJC areas currently receiving funding. The reduction in the number of LJC areas receiving funding results from the proposed removal of rurality funding from 12 existing LJCs, and the refocussing of resources to the main market towns where the needs are greatest.
"Local joint committees in the six main market towns will continue to advise on the details of commissioned provision based on their local knowledge of need.
"The council is committed to supporting the development of sustainable youth activity provision free, where possible, from direct council financial support. This reflects the ongoing challenging financial context.
"It also provides the best chance for the long-term provision of youth activities to be embedded within the local community, using the resources of that community.
"The council will continue to fund the Shropshire Youth Association and Energize to provide proactive support to youth clubs across Shropshire. We recognise this as being crucial to the long-term sustainability of an active and dynamic voluntary community sector."
The council proposes to run a six-week consultation on its plans based around an online survey.
In 2015 Shropshire Council changed the way that it delivers group activities for young people aged 10 to 19 years old (25 for young people with learning difficulties) moving away from direct delivery to commissioning services.
Funding was provided to 18 out of 23 LJCs based on a formula that calculated the areas of greatest need and rural isolation.
Since the new model was introduced over 90 separate awards have been made to over 70 different providers. Awards range from small grants of less than £200, for example, for the purchase of equipment by community groups, to large contracts to established youth activity providers.