The future of Wales Rally GB has been called into question after the Welsh Assembly Government announced it was to withdraw its funding for the event.

The Government is believed to have provided around ?2 million in funding each year to aid the event, which is regarded as one of the more popular rallies on the WRC calendar.

However, the decision by the FIA to introduce a rotation system to decide the WRC calendar means Wales Rally GB will not have world championship status next year, which means it is 'no longer the type of event' the Government says it is prepared to sponsor.

"Wales Rally GB was intended to have World Rally Championship qualifying status each and every year," a spokesperson for the Welsh Assembly Government revealed. "But as a result of an FIA decision, this is no longer going to be the position.

"In particular, the 2010 event is not going to have qualifying status and, as such, is not the type of event which it was agreed that the Welsh Assembly Government would sponsor."

The decision to cut funding comes despite a contract being in place to run through to 2011, with event organisers International Motor Sports Ltd issuing a statement stating that the 2009 running of the event was now 'under threat' following the unexpected move.

"We are shocked and disappointed that the Welsh Assembly Government has taken this position, without even any prior notice or discussions between us, particularly as there is a firm and binding contract in place until 2011," chief executive of IMS Andrew Coe said. "The event has met and in many cases exceeded the key performance indicators laid down by the Welsh Assembly Government under the terms of the existing contract and we were looking forward to continuing our extremely positive relationship with the team at the Welsh Assembly Government.

"In fact the Deputy First Minister, Ieuan Wyn Jones, himself noted the importance of the event in 2007 when he said 'The event ensures a high profile for our country and helps drive forward continued growth of our automotive sector'."

Following the move, IMS will now look to take action against the Welsh Assembly over the issue.

"This unprecedented action towards WRGB by the Welsh Assembly Government has been instigated without any prior notice or consultation," the IMS statement read. "It is in breach of contract between IMS and the Welsh Assembly Government that was signed on 30 March 2006 for the period up to and including the 2011 Rally.

"IMS has no alternative now but to commence proceedings for breach of contract against the Welsh Assembly Government."

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