Cardiff council says the Welsh government has cut its Minority Ethnic Achievement Grant (MEAG) budget to the tune of £620,000.
Council chiefs say they have funded £500,000 of the shortfall already this financial year but the future is uncertain.
Headteachers from schools in the Welsh capital have written to education minister Huw Lewis expressing their concerns about the cuts.
The city has 33 Ethnic Minority and Traveller Achievement Service (EMTAS) teachers. Those on fixed-term contracts have been warned their contracts may not be renewed but the council say no decisions have been taken.
Critics say that any cuts will disproportionately affect Cardiff because of the higher percentage of children from ethnic minorities who live there.
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