The council decision to withdraw funding from the Aberdeen International Youth Festival has been described as "incredibly disappointing" by Culture Secretary Fiona Hyslop.
Aberdeen City Council recently voted to withdraw funding for the annual event from 2018-19.
Councillors instead decided to approve £100,000 for a Year of Young People Cultural Award Programme.
Ms Hyslop said she hoped AIYF could find a "new way forward".
The annual event has been running since 1973 and has hosted an estimated 30,000 young people from around the world.
SNP MSP Gillian Martin, who raised the matter, said the decision to withdraw funding was a "huge negative".
Ms Hyslop told the Scottish Parliament: "This outcome is incredibly disappointing, but it hopefully provides an opportunity for the organisers to pursue other options.
"My officials stand ready to offer advice on alternative sources of funding.
"The benefits of the festival are very well known."
Conservative MSP Tom Mason, who is also an Aberdeen councillor, criticised the management and governance structures of the festival.
Calling for an alternative business plan, he said: "The festival has experienced declining audiences and a lack of city participation over recent years."
However, Ms Hyslop said it was "inappropriate" to attack volunteers and managers of a festival.