When it was opened last year, the Library of Birmingham was hailed as a manifestation of an ambition to put learning at the centre of the city and regarded as a glittering symbol of civic confidence.

But 15 months on, the future is nowhere near as bright for the £188m library after Birmingham city council announced plans to slash opening hours, cut staff numbers and spend less on new books.

Library users and staff representatives reacted with shock to the plans by the Labour-controlled local authority, claiming that the planned cuts were a bitter blow for users, workers and the reputation of the UK’s second city.

But the council insisted that in the face of swingeing government cuts it had no choice but to look at making what it realises will be hugely unpopular savings.

The news comes as figures released on Friday reveal that the coalition has presided over a big decline in the number of libraries. According to the annual library survey by the Chartered Institute of Public Finance and Accountancy (Cipfa), the number of libraries in the UK is down to 4,145, a fall of 8% since the coalition came to power. The figures also revealed a sharp drop in the number of users.

Cathy Cassidy, an author who has campaigned against library closures, said: “We need to be very afraid. Does Britain really want to add the loss of libraries to an already shocking decimation of services? At a time when far too many British kids are subsisting on food bank handouts, will we take away their ladder to learning, imagination and opportunity as well?”

The Library of Birmingham was opened in September last year by Malala Yousafzai, the teenager from Pakistan who moved to the city after being shot by the Taliban for speaking out for girls’ rights to education.

Addressing a 1,000-strong crowd gathered outside the library as “fellow Brummies”, she said pens and books were weapons to defeat terrorism – and said a city without a library was a “graveyard”.

Some – including the Guardian’s architecture and design critic Oliver Wainwright – suggested it was a “strange time” to be opening the biggest civic library in Europe.

It is certainly not cheap. A review of the city’s workings launched following the Trojan Horse scandal in Birmingham and published on Tuesday highlighted, among many other things, concerns about the cost of building the library – and the £10m a year it costs to run.

But the library is loved and busy. Study areas are packed, counters busy with borrowers and at this time of year thousands of sightseers take a break from the heaving German market outside to peek at the biggest municipal library in Europe.

Birmingham’s new library was opened last year by Malala Yousafzai, who said a city without a library was a ‘graveyard’. Photograph: David Sillitoe

“It’s a brilliant place,” said Jo Harvey, a student, 23. “I come here to work; the atmosphere is great: buzzy, but you can get on with things. It was so great when they opened this place; it felt like a real statement of intent – that learning was important, that Birmingham was important.”

In its budget white paper, Birmingham city council is proposing reducing opening hours from a generous 73 to a much more modest 40 and slashing staff numbers by about 100. The authority – which will consult on the plans – says events and exhibitions will not be held unless they can be fully funded by outside sources and it will look at the possibility of using volunteers to boost services.

Council leaders said the proposals were sad but vital as the local authority, the UK’s biggest, tries to make savings forced on it by Westminster.

The council also announced plans to cut a further 6,000 jobs by 2017‑18, which would mean its workforce will have fallen from 20,000 in 2010 to 7,000. In addition, it is mooting the sale of sports pitches and cancelling support for popular events including the St Patrick’s Day parade and Handsworth carnival.

Sir Albert Bore, the council leader, said the authority had already “cut to the bone” and was now “scraping away” at the bone itself. He added: “We now need to make £117m of savings next year, rising to £338m by 2017-18. This is on top of the £462m we have had to save so far.”

Annie Mauger, chief executive of the Chartered Institute of Library and Information Professionals, expressed “deep concern”. She said: “We understand that the proposals are for consultation, but should they be implemented, it will be an astonishing blow to the people of Birmingham. The library has become the beating heart of the city and a resource for all communities.

“This will have a huge impact. We are extremely worried for the dedicated staff who have built up a wonderful service. The library would only be a shell without them but they have brought it alive. We urge the government to intervene.”

The gloom will be deepened by the figures from the Cipfa library survey. As well as loss of libraries, the new statistics paint a bleak picture of borrowers turning away in droves, dwindling staff and book stocks, and a huge decline in lending. This year, there were 282m visits to libraries, compared with 322m in 2010, according to the report, and the number of books lent has dropped from 309m in 2009-10 to 247m books over the last year.

Staff numbers continue to “decrease significantly”, revealed the survey, with full-time numbers down to 19,308 last year, a fall of 22% since 2009-10.

Alan Gibbons, a library campaigner and children’s author, said the UK library service was suffering because of a lack of “strategic leadership”.

He said: “South Korea has 180 new libraries. We have fewer libraries, fewer paid staff, a dramatic rise in volunteers, some replacing professional library workers. Most obviously we have a declining book stock and reduced opening hours.”