The government is to get rid of 287 advertising and marketing jobs as part of its spending cuts programme.
Staff numbers at the Central Office of Information (COI) will fall by two-fifths from 737 to 450.
The move follows a government freeze on "non-essential advertising", with the COI's budget estimated to have fallen by more than half.
Chief executive Mark Lund said the operation would become "leaner", but unions said they were "disappointed".
Staff are being offered the chance to apply for voluntary redundancy, although there are expected to be compulsory lay-offs.
A formal 90-day consultation period has begun. It will end on 1 November.
The COI said its turnover on advertising and marketing had fallen by an estimated 52% in June this year, when the spending freeze was imposed, compared with the same period in 2009.
Mr Lund said: "COI has always adapted to meet the requirements of government and the changing media landscape. A leaner COI is in line with new government priorities.
"Our future will be grounded in continuing to deliver excellent communications to achieve government aims, in the most cost-efficient and effective way possible."
COI does not have its own dedicated budget but works for Whitehall departments and public sector bodies, having a turnover of £531m in 2009/10.
Julie Flanagan, a negotiator for the Prospect union, said: "We are disappointed by today's news that will result in the loss of two-fifths of COI's staff, employed not only in the capital but in major cities throughout the UK.
'On the cheap'
She added that "we are deeply disappointed that the Cabinet Office has indicated to COI that redundancy payments must be capped at 15 months' pay in line with terms due to be introduced as part of the government's forthcoming bill.
"Staff feel the Cabinet Office is using this period of uncertainty over changes to the compensation scheme to get rid of these employees on the cheap."
The government said its freeze on advertising and marketing had saved almost £6.5m since June.
Cabinet Office minister Francis Maude said: "The days of spending millions of pounds on expensive projects are over.
"I know that tough decisions like this one have difficult consequences, and the COI's restructuring announcement today is evidence of that, but it is incredibly important that we keep pushing to make government as efficient as possible."