The government has confirmed that it is to award a quarter of a million pounds from an unpopular levy on women’s sanitary products to an anti-abortion organisation, despite objections from women’s groups and MPs.

There was an outcry earlier this year after the Observer revealed that £250,000 of the money raised from the so-called tampon tax – the 5% rate of VAT that is levied on sanitary products – would go to Life, a charity that campaigns against abortion.

The organisation also opposes plans for the expansion of sex education in primary schools and has been at the centre of controversy over the information provided by a network of unregulated pregnancy counselling centres.

Petitions opposing the grant gathered half a million signatures, while under-pressure ministers subsequently said that the specifics of the grant agreements had yet to be finalised.

However, a reply by the Department for Digital, Culture, Media and Sport (DCMS) to a Freedom of Information request has now revealed that the award from a £12m pot will be made, though Life will be “prohibited” from spending the money on publicity or on its controversial pregnancy counselling and education services.

Diana Johnson, one of a number of Labour MPs who had pressed the government to review the grant decision, said: “This decision is not in keeping with the spirit of the tampon tax fund, which was intended to improve the lives of disadvantaged women and girls.

“This money would be much better spent on women’s organisations which truly reflect the values of this fund to empower and support women to make decisions about their lives, rather than an organisation that actively promotes restricting women’s choices.

“Many excellent women’s organisations will have lost funding bids to Life. I am very disappointed that ministers have made this decision in light of the public outcry when this was first put forward.”

The British Pregnancy Advisory Service said: “It is not fitting for what is ultimately a tax on women’s bodies to be spent in this way when there are so many other projects supporting women and their choices which have not benefited .”

The government announced in March that 70 organisations would share £12m from the tampon tax fund, which it said would improve the lives of disadvantaged women and girls.

A longlist said Life would receive £250,000 for “housing, practical help, counselling, emotional support and life-skills training for young pregnant women who are homeless”. The sum was among the largest grants on the list.

The tampon tax was the focus of bitter controversy last year. Changes are expected next year that will remove VAT from sanitary products entirely. The government has already reduced the VAT rate from 20% to 5% but says it cannot go further at present because of EU competition rules.

Life said: “There is no need for ‘prohibition’ on how the grant is used. We have been very clear with the government in actually specifying that the grant will not be used for counselling or education. As we have stated before, all funds received from the government will be used to support vulnerable women in crisis.”

The DCMS said: “As set out in the grant agreement, Life will not be able to use the tampon tax grant to fund its counselling service, or its ‘Life Matters Education Service’ and is prohibited from spending the money on publicity or promotion.

“The grant is for a specific project in west London to support vulnerable, homeless or at-risk pregnant women who ask for their help. All payments will be made in arrears and on receipt of a detailed monitoring report.”