The Immigration Advisory Service, which employs 300 staff across 14 branches in the UK, has this week gone into administration, as a result of losing more than half of its income following government cuts.

Immigration accounts for around 60 per cent of Immigration Advisory Service’s (IAS) income. The government has removed immigration from the scope of legal aid and cut legal aid fees for refugees seeking asylum in the UK by 10 per cent.

An IAS spokesman for the 35-year-old charity said: “There are few organisations that could cope with the compound effect of removal of immigration from the scope of legal aid and a cut in fees for asylum clients.”

IAS's latest annual accounts for the year ending March 2010 showed it spent £16.9m, but only earned £16.1m.

Further, the IAS owes the Legal Services Commission money which it says was claimed in error, due to complex funding rules in place.

“The legal aid cuts put IAS in the position of needing to fund any repayment of these monies, from a much reduced income base, and as a result it has not proved possible to reach agreement on a way forward,” a spokesman said.

The LSC said the IAS's decision to go into administration was "theirs alone".

A spokesman said: "During recent stewardship activities LSC raised concerns around financial management and claims irregularities which prompted IAS trustees' to conclude that the organisation was no longer financially viable.

"Our priority now is to work closely with IAS and the administrators to ensure clients of IAS continue to get the help they need, whilst safeguarding public money.

"We are now identifying alternative advice provision in the areas affected and arrangements for case transfer will follow as soon as possible."

IAS administrators will be working closely with LSC over the next few days to ensure that appropriate arrangements are made for all of IAS’s clients, and clients are advised to monitor IAS’s website where updates on arrangements will be posted.