VisitBritain has warned that further cuts to its core budget risk damaging an important sector of the economy and bringing about a fall in the number of visitors to the UK.
The Department of Culture Media and Sport (DCMS), which funds the tourism agency, is itself facing a further 8% cut to its budget, according to reports.
Because the budgets for Sport England and the arts are protected, there are fears that the money spent on tourism marketing could be disproportionately affected.
VisitBritain suggested that its core funding could be cut by 12%, compared with only a 5% cut for the arts.
VisitBritain chairman Christopher Rodrigues (pictured) called for the budget cuts for his organisations to be set at 5%, mirroring the arts.
"If they cut our budget any more, we will have to consider cutting countries. The overhead has come down from £12m to around £4m, and nearly £1m of that is paying pension liabilities which previous administrations had not properly funded.
"We are a pretty lean organisation but if we cut now, we either cut our geographic coverage, which means markets don't get supported to the level they do now, or we cut marketing, which is a real self-inflicted wound because what happens then is that we haven't got the money to match what our partners want to put on the table.
"If you take the money out of the marketing, you stop getting the visitors. We can get a new overseas visitor for around £20. We match that with £20 of money from the industry, sometimes from foreign industry. And those average long-haul visitors generate over £300 in taxes.
"What we are concerned about is to support Hugh Robertson [Sports and Tourism Minister], who I know is fighting very hard for our position to be protected at no more than a 5% cut."
The £125m GREAT marketing campaign, which is expected to deliver £2.3b into the UK economy by 2015, is controlled by a separate budget and there are no details so far about how this will be affected. Excluding the GREAT campaign, Britain is set to spend £2.5m on promoting UK tourism this year. Australia, by comparison, spends £20.5m in China alone.
British Hospitality Association chief executive Ufi Ibrahim, added: "VisitBritain's budget has been cut by 56.5% in real terms over the past decade, even though £1 spent on tourism marketing produces an extra £18 in additional spend by visitors, much of which gets back to the Treasury as extra tax receipts. Hospitality and tourism is one of the UK's most successful growth sectors and we have achieved growth despite, rather than because of the Government, which is now cutting VisitBritain's funding by a likely further 12%."
She said that the association would be writing to the Prime Minister to express the industry's dismay at the development.
The Treasury is expected to make a final decision on the DCMS budget and the way the cuts are apportioned by 26 June.