Youth work charity Kids Company is to stop running services from Wednesday evening, it has been reported.
The London charity received a £3 million government grant just days ago after agreeing to make changes to the way it was run.
However, it was reported by the BBC that it has told the Government it will close its services on Wednesday evening.
It was announced last month that Camila Batmanghelidjh, the organisation's founder, was to move to a new role as part of a shake-up which the charity said was prompted by "unprecedented financial strain".
Last week it emerged the Metropolitan Police is investigating allegations of child abuse and sexual offences involving Kids Company.
Plans are now being made to support vulnerable young people who would need help if the charity does close.
A Southwark Council spokesman said: "We have been in discussions with the Department for Education and other local authorities, preparing for the closure of Kids Company.
"Although Southwark doesn't refer any children to the charity, some will have sought out their services.
"We are ready to support any vulnerable children and young people in the borough who are affected by the closure of Kids Company."
Kids Company said in a statement: "Speculation about the closure of Kids Company is both dangerous and irresponsible and places the children we support at great risk".
Kids Company was founded in Camberwell, Southwark, south London, in 1996.
Mayor of London Boris Johnson said he was a "huge fan of Camila and of Kids Company".
He told BBC Radio 4's Today programme: "What I want to happen is to ensure that all the kids who've been receiving care and attention from Camila and her team will have some kind of safety net, and that if indeed it is correct as you say that Kids Company is going to close, then what I want is to see the other voluntary organisations that we support through City Hall, through Team London...through the Mayor's Fund for London, that we try and move in and do what we can to provide some help."
A Lambeth Council spokesman said: "We are aware of the concerns over the future of Kids Company and its work in Lambeth, and our priority is looking after the children and young people who rely on its services."