Two major donors to campaign group Cage have pulled funding in protest at the organisation's apparent defence of the Islamist militant known as Jihadi John.
The Charity Commission revealed it had taken "robust action" to demand that the Joseph Rowntree Foundation and the Roddick Foundation would cease all current and future donations to the group.
It comes after Cage confirmed it had been in contact with Mohammed Emwazi, who has been identified as the masked militant, and sparked outrage by describing him as a "beautiful young man" and blaming UK intelligence services for radicalising him.
Last week, public statements by Cage officials heightened concerns about the use of charitable funds to support their activities.
In our view, those statements increased the threat to public trust and confidence in charity.
Lawyers for Mohammed Emwazi's father have told ITV News there's no evidence his son is IS killer 'Jihadi John' as "his face is covered".
Newly released audio recording of Mohamed Emwazi, aka "Jihadi John", reveals his claims that he was threatened by MI5 five years ago.
"I really think that the focus of your outrage should be people who throw gay men off cliffs", said London Mayor, Boris Johnson.