Chancellor George Osbourne has revealed the British Education Communications Technology Agency (Becta), which handles technology in UK schools, is being scrapped.
The move is part of a number of measures announced by the new coalition government in a bid to save £6.2bn in public spending. Other cuts included a freeze of employing civil servants and reduced funding for IT programmes.
Up to 240 jobs could be lost by closing Becta, which is based at the Coventry campus of the University of Warwick and costs £65m per year to run. It is thought around £10m will be saved this year by axing the agency.
Becta chairman Graham Badman, and chief executive, Stephen Crowne, said they were "very disappointed at the government's decision" and believe the organisation "saves the schools and colleges many times more than Becta costs to run".
"Our procurement arrangements save the schools and colleges many times more than Becta costs to run. Our Home Access programme will give laptops and broadband to over 200,000 of the poorest children," Becta said.
"Our top priorities now are to make sure we have an orderly and fair process for staff, and that as far as possible schools, colleges and children continue to benefit from the savings and support that Becta has provided."