The elite gymnastics centre in Perth that produced former world champion Lauren Mitchell will be shut by the Western Australian Institute of Sport.
The move on the eve of the Rio Olympics to close the 28-year-old Women's Artistic Gymnastics National Centre of Excellence at the end of the year was described as a huge blow for women's sport by Gymnastics Australia.
The need to direct funds towards athletes and sports more likely to contribute to Australia's international sporting success were cited by the WAIS as a reason for the decision.
"This factored amongst other things, national funding allocations and an assessment of the sport's ability to contribute in the short to medium term, towards future targets," WAIS executive director Steve Lawrence said.
He said it had been a difficult decision to make but would help maximise WA athlete opportunities within the available resources, to represent Australia.
The WA government-funded centre has produced nine Olympians, 10 Commonwealth Games representatives and several World Championship medals, says Gymnastics Australia.
It was currently training 60 women, including WA's 2010 World Champion, Lauren Mitchell as well as top prospects for the 2020 and the 2024 Olympic Games, Gymnastics Australia president Jacqui Briggs-Weatherill said.
"This is a very cruel and short sighted decision by WAIS that if not reversed will end the Olympic ambitions of many young women in one of Australia's fastest growing sports," she said.
Australia was falling well behind the money spent by other competing nations on gymnastic high performance programs, including the UK spending four times the amount, she said.
Only one Australian artistic gymnast, Victorian Larrissa Miller was picked to compete at the Olympics and Mitchell missed out.
Elite training centres for artistic gymnasts operate in Melbourne and Canberra.