Staffing at a women's housing service in Warrawong will be pared back to minimal levels - no longer equipped to accept crisis cases - when a major source of funding disappears.
The Salvation Army's Carinya Cottage now offers around-the-clock staffed accommodation and support for up to eight families at a time, housing 60 women and children in the past financial year.
Six of the refuge's eight staff have been told their positions will be cut due to a funding shortfall.
Until now, much of the refuge's operating budget has come from surplus funds - rent - collected from outreach housing in Sydney, which is owned by the state government and operated by the Salvation Army.
Robyn Black, Salvation Army's divisional mission and resource director for social services, said a government decision to transfer the outreach housing to another operator would sap the Warrawong operation of funds.
It would continue as a less-resourced "transitional accommodation" service, no longer staffed at night.
"It will still be for women and children who are homeless, but in a more stable place in their life," Ms Black said. "They may need to go to another [crisis] accommodation place before they come to us."
Ms Black said women escaping domestic violence or other conditions of crisis would be directed to Wollongong Women's Refuge, Warilla Women's Refuge and Paddy's Place in Wollongong.