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Clarification is being sought over plans to block funds for projects which are supposed to aid Cornwall's economy.

The Regional Development Agency says it has been told by the Government not to process any more applications for a series of European-funded schemes.

Types of "Convergence" funding projects affected include business, technology and transport initiatives.

A spokesperson for the South West RDA said: "We are seeking urgent clarification."

The Convergence funding scheme for Cornwall and the Isles of Scilly, which is worth up to £500m in grants, was set up in 2007 and was due to run until 2013.

The RDA spokesperson said: "We have been provisionally told that we can no longer make investment grants from [the] European Regional Development Fund.

"We are seeking urgent clarification from Her Majesty's Treasury, Communities and Local Government and our sponsor department Business Innovation and Skills on this issue.

"If ERDF does not continue, it would have a serious impact on hundreds of businesses across the region and damage the growth prospects of the South West economy.

"The types of projects affected would include next generation broadband, business premises, transport schemes and investment in innovation and science-based initiatives."