About 4,000 low-income families with disabled and seriously ill children could miss out on grants due to funding cuts, charities have warned.
Family Fund, which gives out grants, will get less than £2m from the Welsh Government over three years, compared to the £2.5m each year it had received.
Kate Wyke, from the charity Contact a Family, said money for household goods and other costs was a "lifeline".
The Welsh Government said Family Fund was awarded the maximum available.
Parents or carers on a range of benefits or with low incomes can apply for grants to pay for furniture and electrical appliances, days out and holidays, and specialist toys or computers.
Supporters of the fund have said Wales is facing a cut of £5.5m over three years, while government funding in England, Scotland, and Northern Ireland will stay the same.
Grants were being given to nearly 5,500 families last year, but that figure is expected to fall under new rules on who can apply.
Since April, families cannot take part if they had a grant in the last three years. As a result, charities say only about 1,500 will get help in this financial year.
Keith Bowen, director of Carers Wales, accused ministers of making the change "without considering the impact it would have on the most vulnerable families with disabled children".
"The reduction in funding has come at a time when families with disabled children have been hit time and time again by cuts to welfare payments and disability services," he said.
Ms Wyke added: "Families tell us that the grants provide a lifeline.
"These are families who are already more likely to be living in poverty due to extra disability costs and the difficulties of juggling work and complex care.
"What's so unfair is that if these families lived in Scotland, Northern Ireland or England they could still get a grant."
Soura Shinton lives in Cardiff with her husband and two sons - including her youngest Eddie, who has cerebral palsy as a result of his premature birth.
Family Funds has previously paid £500 for the family to go on a four-day holiday each year to relieve some of the pressure they live under.
Ms Shinton, a full-time mother, told BBC Radio Wales' Good Morning Wales Programme: "Obviously with all the services being cut across Wales, it comes as no surprise that we turned to charities and organisations for support and their expertise.
"As a normal family of four with only my husband's salary to depend on, obviously we can't afford any holidays.
"Family Fund were very kind and considered our application.
"We have taken the boys to Center Parcs. It was lovely and provided us with some family time, bonding. It was that little respite and time we spent together."
She added: "For families with special needs children, it is a squeeze.
"Now, we're going to be sitting in the house, without a holiday. Any extra money we have we put towards Edward's physiotherapy."
Family Fund was awarded £1.5m over three years - the most the Welsh Government awards voluntary organisations working in social services.
Another £400,000 will be made available "in order to try and become more sustainable in the future", social services minister Rebecca Evans told AMs in November.
In May 2014, the Family Fund voiced concern over a delay in a Welsh Government decision on funding, which left 500 families waiting several weeks for their grant requests to be settled.
A Welsh Government spokesman said: "The Sustainable Social Services Third Sector Grant Scheme brought together funding from four previous grant schemes to help third sector organisations deliver our ambitious agenda for social services in Wales.
"Given that there was a great deal of interest in the scheme, with applications significantly outstripping the funding available, a decision was taken to limit the maximum grant available to any single project to £1.5m over three years.
"To be clear, we are providing significant funding to a number of organisations through this fund."
The statement added £22m had been allocated to 32 projects over three years.