Ukip was plunged into a fresh crisis last night as it faced axing half its staff because of a funding shortage.

The party had expected to cash in on the four million votes it got at the general election with £3.3million of public money by 2020.

But after its sole MP Douglas Carswell refused the full £650,000-a-year parliamentary funding to which Ukip is entitled, saying the party should not ‘jump on the gravy train’, it is now being forced to cut back dramatically on staff.

Scroll down for video

MP Douglas Carswell refused the full £650,000-a-year parliamentary funding to which Ukip is entitled - plunging the party into crisis

The party had planned to reduce its staffing level as it adjusts from the ‘war footing’ it had during the election campaign, but employees who expected to continue being paid have now been told they will lose their salaries.

Ukip chairman Steve Crowther is understood to have told staff on Tuesday there was not enough money to keep them on the payroll. The party is thought to be losing a dozen of its approximately 30 members of staff.

One source said those on paid roles were told the party was effectively ‘shutting up shop’ as it laid them off, and it would look at the possibility of employing them again after the summer as it prepares for its annual conference.

After the election Ukip officials are understood to have drawn up plans to hire 15 members of staff at Westminster using the ‘short money’ paid to opposition parties by Commons authorities to help with their parliamentary work.

A source close to Mr Farage initially hit back and accused Mr Carswell of ‘absurd’ and ‘improper’ behaviour

But Mr Carswell last week publicly denounced the proposal and said he only wanted to take around half of the entitlement, saying: ‘Ukip is supposed to be different and will be different.’

A source close to Mr Farage initially hit back and accused Mr Carswell of ‘absurd’ and ‘improper’ behaviour.

But in attempt to outflank Mr Carswell, the Ukip leader announced during an appearance on Question Time that he would be recommending the party took none of the money.

Ukip had also been expecting to get a share of the public funding allocated to parties by the Electoral Commission to help develop policies, but it is not entitled to this as it did not get two MPs.

Belgian MEP Guy Verhofstadt told Mr Weber that he ‘doesn’t understand how it works’ in Ukip

The funding shortage comes as Nigel Farage attempts to recover from a leadership crisis that plunged Ukip into a bitter civil war when he went back on his pledge to step down from his role at the top of the party.

Mr Farage was yesterday left squirming as he was mocked by senior Belgian and German MEPs in the European Parliament over his farcical ‘unresignation’.

To laughter in the debating chamber, the Ukip leader was accused of writing to himself to announce he wanted to quit before replying that he refused the resignation.

Manfred Weber, a German MEP, teased the Ukip leader, telling the European Parliament: ‘I would like to welcome Mr Farage, the loser of the elections, the big election loser in the UK.

To laughter, Belgian MEP Guy Verhofstadt told Mr Weber that he ‘doesn’t understand how it works’ in Ukip.

Mr Verhofstadt, a former prime minister of Belgium, said: ‘He is a man of his word. Nigel Farage has sent a letter to Nigel Farage saying “I resign”, and Nigel Farage has responded to Nigel Farage saying “I refuse”... That’s the way it works there.’

In an attempt to put an end to the in-fighting, Mr Farage told BBC Radio 4’s Today programme: ‘What has happened in Ukip is since the election after the pressure cooker atmosphere of a campaign one or two regrettable things were said and done.

‘I’ll tell you where this leaves Ukip - unlike the other parties - united. 100 per cent united.’

A Ukip spokesman last night said: ‘The party simply does not have the money to have lots of staff.’