The centre's free lunch program serves 12,000 meals to needy people each year, on NSW government funding of just $80,000.

That funding has been slashed, and the program has run out of cash. Warrawong Residents Forum manager Maxyne Graham, who runs the lunch program, says it will leave many people hungry.

"We're getting more and more people coming here. People finding it hard to pay rent, young men retrenched from their jobs. We're dealing with more people than ever," she said.

"These are people who don't usually have to access community services. A lot of people are surviving just on welfare, and after paying rent, can't afford to eat."

Ms Graham said the community centre had managed to scrounge up an extra $20,000 from BlueScope and other local businesses, but recently missed out on federal funding, and without a further funding injection, the lunch program would cease for good by mid-2015. She said the program's end would have knock-on effects in the community.

"We'll scrape through for a few months, but after that, people will get unwell because they can't eat properly," Ms Graham said.

"Crime will go up. There will be more pressure on charities to feed these people."

Ms Graham said about 200 people attended the Christmas Eve lunch. One of those was Clare King who said that after paying bills, rent and school expenses for her children, she was left with as little as $35 a week for food and often went hungry to instead feed her children, before starting to attend the free lunches.

"The program is very valuable. I would sometimes go without meals, but now I don't go hungry as much," Ms King said."It will change things for me, for a lot of people, if the lunches go. There are people worse off than me."