RDA spokesman Sir Harry Studholme, who is also chair of the South West RDA, said that most agencies had already committed large parts of this year’s spending, which would mean contracts would have to be revised.

“We do not yet know which individual projects and areas of RDA work will be affected, but each RDA is likely to have to find a share of the overall reduction in the next few weeks, ” he warned.

“We cannot rule out at this stage looking to delay or scale back on some projects to which we are already committed.”

England’s RDAs have been asked to find £270m of savings, some 20% of this year’s budget as part of the Government’s £6.2bn savings package.

The news is another blow to contractors and house builders focused on regeneration work following the Homes and Communities Agency’s statement that £230m would be axed from budgets, and a further £610m of project funding frozen.

Sir Harry said: “This will not be easy particularly as we are already six weeks into the current financial year and RDAs will have already committed substantial parts of their budgets.

“We will work with our partners across the country to make these reductions quickly and efficiently while still continuing to support hard-pressed businesses, help re-balance the economy and invest in a low carbon future.”