Britain's leading deaf athletes may miss the chance to represent their country at the highest level next year after the Government diverted funding for the 150-strong team to the London 2012 Olympic Games.

Medal contenders in training for the Deaflympic Summer Games, in Taipei in September 2009, said that the decision threatened to shatter their lifelong dreams and would further marginalise the nine million people in Britain with a hearing loss.

From March this year, UK Deaf Sport, which represents deaf athletes, lost its £42,000 annual grant from UK Sport, the public funding agency whose priority is now to back Olympic and Paralympic athletes competing in Beijing in August and London in 2012.

Forced to sack its staff because it was offered no alternative public funding, UK Deaf Sport is trying to raise the £500,000 needed to send a team to Taipei next year. “We are a national governing body and we are running on a voluntary basis out of our homes. We have tried everything, but people in Government keep passing the buck,” Josef Baines, the secretary, said.

“Meanwhile, they are pouring millions into the London Olympics. We are taxpayers, too, and, given the choice, we would rather not have London 2012.”

The Deaflympics was established in 1924 by nine European nations, including Britain, making it second only in heritage to the Olympics. The Silent Games were held in Paris that year, with 148 participants, marking the first Games dedicated to athletes with a disability.

Since then, it has grown as a movement: 2,200 athletes from 67 countries took part in the Deaflympics in Melbourne in 2005. Britain, comprising 80 athletes in eight sports, won 16 medals - more than Australia, the host nation, and one of the team's biggest hauls at the event.

“It would be embarrassing if the Deaf Olympic Games, which Britain helped to found, had no Britain team,” Philip Gerrard, chairman of the Great Britain Deaflympics Organising Committee, said. “It would cause so much damage to the deaf community and our profile worldwide. We may have to pull out of Taipei if there is no financial support from the Government within the next few months.”

Deaf athletes claim that they have been “pushed out of the equation” in British sport. They cannot compete at the Paralympics because no other nation sends a deaf team to those Games. “I feel we are marginalised. It may not be deliberate because you could walk past me and not know I'm deaf. It's more about awareness,” Xander Hurley, 31, a badminton player from Oxfordshire who is ranked in Britain's top three, said. “But the mentality goes to the highest level of government.”

Born deaf, his parents were told by a doctor that he would be good for nothing but factory work and would never utter a word. He is now a software engineer with virtually fluent speech and hopes to be selected for the Deaflympics team. He worries about the future after the funding cut because he already spends more than £5,000 a year to pursue his sport.

Esther Maycock, 28, a television signer who won a bronze medal for football at the Melbourne Deaflympics, has an anxious wait until August, the deadline for submission of the deaf football team. UK Deaf Sport cannot risk incurring the £50,000 fine for pulling out once it has signed up to Deaflympics, so is waiting until it knows how much money is available.

Gerry Sutcliffe, the Sports Minister, told UK Deaf Sport in a letter in February that the “difficult decision” to cut Exchequer funding had been made because of the need to focus resources on the Olympic and Paralympic programme for Beijing 2008 and London 2012. A spokesman for UK Sport said: “We informed them as far back as 2006, so we have been very clear about this for some time. As the agency charged with delivering medal success at the Games, we have taken the decision to prioritise our investment on Olympic and Paralympic sports and athletes. This has led to some organisations, previously funded, no longer being so. It does not lessen their relevance or appropriateness, but in a world of finite resources the decision is the right one.”

However, deaf athletes argue that they are better value for taxpayers' money than their Olympic and Paralympic peers. “The cost of winning a medal at the Deaflympics was £1,400, a stark contrast to the £1.6 million per medal at the Athens Games in 2004,” Gerrard said. “We are not asking for a massive amount. It really is peanuts compared to the millions being spent on the Olympics. That is what is so frustrating because it will have a massive impact on deaf athletes.”