Cats Protection has emerged as the latest and biggest charity victim of the Icelandic banking crisis with £11.2 million of deposits in Kaupthing Singer and Friedlander now at risk.

A spokeswoman for the charity said plans for a series of new adoption centres for abandoned and unwanted cats could now be in jeopardy, although day-to-day operations at the charity would not be affected.

"The only areas of Cats Protection’s work that may be affected will be those plans around future new facilities," she said.

“Cats Protection believes there is a case to be made to the Treasury that its particular deposits are public money that has been donated for us to help cats and provide benefits to the public. The charity feels strongly that public deposits should be safeguarded."

However a meeting between Paul Myners, minister for the City, and charity group leaders to discuss the estimated £125 million of donations tied up with stricken Icelandic lenders broke up without any promise from the Government that it would step in.

Mr Myners asked the National Council of Voluntary Organisations to compile a definitive list of which charities were effected and by how much, and also a second list of charities that could face severe financial difficulty as a result of the Icelandic problem.

Speaking after the meeting at the Treasury, John Low, the Charities Aid Foundation chief executive, said: “They gave reassurance they would do their best to help but there was not any guarantee as we would have liked. There was no suggestion that there would ever be any guarantee, just that they would make best endeavours to support charities. But that was it."

Charity finance experts said that although £11 million is a lot of money to have in one place on deposit, it reflected the way Cats Protection receives its donations, with much of its £35 million annual income coming in legacies.

Most charities are also required by their trustees to hold a large sum of money in reserve because their income from donations is so volatile.

The Charity Commission has urged them to place their donations in deposits rather than in cash back accounts to get a better rate of return.

Stuart Etherington, chief executive of NCVO, said the issue of Icelandic deposits had to be addressed immediately by the government .

“Just like local authorities, charities had money in Icelandic banks. They weren’t as comprehensively advised as some local authorities so I think there is a case for some mechanism to compensate them for that.

“We are talking to the Treasury currently about that and are seeking a scheme which would help those charities with holdings in Iceland,” he said.

Ministers have said the fact that local authorities have access to top quality financial advice means they are not in the same boat as individual investors and refused to bail them out. The Government has already guaranteed all deposits held by individuals.

There has been some good news for smaller charities, however. The Financial Services Authority has said if they are registered as limited companies as well as charities, they will be entitled to some money back under its compensation scheme.

Most charities are structured in that way to limit the financial exposure of the trustees. If their turnover is not more than £6.5 million and they have not more than 50 employees, they will get £50,000 back under the Financial Services Compensation Scheme.

But Mr Etherington said there were wider issues for the sector. Demand for services from charities has already rocketed over the last year. Citizens Advice reported yesterday that its centres had seen a 50 per cent jump in the number of people seeking help about mortgage arrears, for example.

The surge in demand had coincided with fears donations would dry up as households cut back on spending. “Demand for charitable services is going up and the amounts of money available to them may go down. We need to work out what charities can do, how they can work more collaboratively and try to reduce costs.”

He said the government had a role to play, especially when it comes to the tax regime that operates around donations. One report discovered a third of charities have already seen a fall in donations from individuals since the credit crunch hit.

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