Leading arts organisations including the City of Birmingham Symphony Orchestra are facing substantial cuts after a 25 per cent reduction in grant funding was approved by council bosses.
Birmingham City Council currently spends £6.425 million per year supporting arts and cultural organisations but is now writing to the groups to tell them this will be cut to £4.85 million from March.
It is the third major reduction in arts subsidies in the austerity era, following a 17 per cent cut in 2010 and a further 20 per cent cut two years ago.
Among those hit are the City of Birmingham Symphony Orchestra, Performances Birmingham - the charity which runs the Town Hall and Symphony Hall - REP theatre, Ikon art gallery and The Drum in Aston, soon to be expanded.
The announcement comes as new research out today says Birmingham has enjoyed another record year for the visitor economy, fuelled in part by the city's arts offering.
Labour cabinet member for culture Coun Penny Holbrook said: "This is not something we want to do but the financial position of the council is clear to everybody.
"However, we are still investing almost £5 million in the cultural offer of the city despite a reduction in the funding we can realistically offer.
"We have been talking to the organisations for the last 12 months about this."
The city council has previously stated that a well supported arts and culture sector are vital to Birmingham's status as a global city and one of the factors which generates investment and brings in visitors.
Coun Holbrook added that the sector would be supported as far as possible, saying: "Arts are essential, not just for the local economy but also for the soul."
Conservative opposition leader Robert Alden suggested that, as the council was working more closely with neighbouring authorities, it should seek more regional arts funding from the Government, through either the West Midlands Combined Authority or Greater Birmingham and Solihull Local Enterprise Partnership.
Also being supported is the Birmingham Arts Partnership, which represents 14 arts and culture organisations and works with the city council and Arts Council to secure funding.
The partnership has been helping organisations plan ahead for cuts in grants.
Its members are City of Birmingham Symphony Orchestra, Birmingham Contemporary Music Group, Birmingham Hippodrome, Birmingham Museums Trust, Birmingham Opera Company, Birmingham Repertory Theatre, Birmingham Royal Ballet, DanceXchange, The Drum, Ex Cathedra, Ikon, mac Birmingham, Town Hall Symphony Hall and Sampad Arts.