Conservators around the world have been shocked by the University of Southampton's decision to “condemn to oblivion”, in the words of the UK Institute of Conservation (Icon), the world's leading school for textile conservation.

The Textile Conservation Centre (TCC), which has trained half the world's select group of 800 textile conservators, including the winner of this year's £15,000 national Conservation Award, is to close because it no longer fits the university's research and funding criteria.

The president of the International Institute of Conservation, Jerry Podany, of the Getty Museum in California, wrote to the Vice-Chancellor of Southampton, Professor Bill Wakeham, saying the decision is “widely perceived as no less than a betrayal of trust”.

“We see the university's decision as damaging to the world's textile heritage, the international conservation community, and most sadly a poor repayment for the loyalty, high standards and dedication of its highly motivated staff,” he wrote.

However, it is understood that an endowment of £5 million could still save the centre, founded in 1975 in Hampton Court Palace but since 1998 based in Winchester School of Art, with a staff of 16 and 60 students.

When it merged with Southampton its own charitable foundation raised £1.7 million to help to build and equip a purpose-built centre on the campus of the art school, part of the university. However, the university's policy is that each of its faculties needs to be self-funding and make a significant contribution to the central running costs of the university, and attempts to create a business plan for the centre have failed, as have approaches to other universities. The conservation centre building is to be used for other disciplines.

The TCC is forbidden to discuss the situation publicly but it is said to be devastated by the decision after 32 years of steady development and achievement. Although it established its international reputation at Hampton Court, the limited facilities there were preventing progress, and with the help of the Arts and Humanities Research Council (AHRB) and its own fundraising the TCC merged with the university and opened in its bespoke premises in 1999. Since then it has won universal respect for its publications, teaching, outreach and conferences, and in 2002 the TCC was given then the largest grant yet awarded by the AHRB to establish a research centre.

Among recent conservation projects by the centre's commercial wing have been Freddie Mercury's outlandish concert costumes, early 20th-century women's movement banners, and more than 100 backcloths and scenery flats from the 1870s Normansfield Theatre, which has now been restored (The Times, January 10, 2007). One of the most recent has been the restoration of a rare 18th-century Jolly Roger flag, captured in battle by a Royal Navy captain in 1780.

Icon believes the decision is in direct conflict with the Government's declared support for Britain's conservators as one of the flagships of our cultural diplomacy, exemplified by the recommendations of a recent House of Lords report on science and heritage chaired by Baroness Sharp of Guildford, which resulted in increased research funding for conservation, from which the TCC would have benefited.

Peter Longman, deputy chairman of the TCC Foundation which raised the £1.7 million for the new centre, said the problem was a profound one of academic funding for practical facilities and that there needed to be an international colloquium to help to find a new home for the TCC.