SBS has learnt that grants offered by the Labor government will soon be scrapped by the new government.

The Building Multicultural Communities Program offered up to $160,000 for the small infrastructure projects of community groups.

Labor claimed its purpose was to enhance social cohesion.

Now it seems the scheme will be axed, for a budget saving of nearly $16 million.

SBS has obtained a letter to a successful recipient of the grant by the Department of Social Services which outlines the government’s reasons for scrapping the program.

“In light of the current state of the federal budget, the Government has decided to reduce the scope of the… Program,” the letter reads.

“As we have not yet reached agreement or entered into a funding agreement with your organisation, and as a result of the reduction of the scope of the program, the Department is withdrawing the offer of funding.”

A spokesperson for the Social Services Minister was not able to confirm whether or not funding was revoked for all successful recipients, instead issuing a statement that simply reads: The Department is contacting organisations which applied for funding to let them know the status of their applications.

Sources have told SBS that the Government plans to send out letters to recipients early next week informing them that their funding will be revoked.

Many of the community groups involved are furious at the outcome.

Some had already started their projects.

“To have a piece of paper arrive on your desk saying you've been successful, then to say no you're not - I think that's misleading,” says Matt Noffs, Acting Director of the Ted Noffs Foundation.

“It's just a small difference, but it’s an important difference that it makes for all of us,” Warren Fineberg from Melbourne’s Jewish Holocaust Centre, says.

The Coalition says the scheme was little more than a pre-election promise, and the funds were used for things like gym equipment and coffee machines.

In a Senate Committee last month, Liberal Cory Bernardi said the scheme smelled “like pork-barrelling”.

“Nearly 80 percent of grants went to Labor-Greens, or Labor-aligned independents' electorates,” Senator Bernardi said