The charity, which funds projects in 50 countries and whose president is the Princess Royal, is to cut its pounds 91m overall budget by 10 per cent April 1997.
"It's a very tough fund-raising climate anyway, and half of our income is from voluntary contributions, which is under pressure," said Don Redding, a spokesman for Save the Children.
"People feel they don't have much money in their pockets, and they're not going to have much money coming in in the future.
"When you add the lottery to that, it's a significant new pressure that adds to the problem."
The cuts will result in job losses and the closure of projects, including family centres and schemes for young people leaving care in Britain. The 80 British projects supported by Save the Children will not escape unscathed.
It is not the first funding crisis the charity has faced. Last year, it announced it was cutting pounds 30m from its budget over four years as a result of the decline in fund-raising.
In a statement issued yesterday the charity said: "In the changed world of the Nineties, we have found ourselves trapped between massively rising demands around the world as children become poorer and more exploited, and a recession which has affected everyone's pockets at home."
Camelot, the National Lottery operator, denied it was adversely affecting the charity sector, and said in the long run it would release millions for charities through the good causes boards, which distribute money raised from the lottery.
"We are raising millions of pounds which we're handing over to good causes. Charities are eligible to apply for those funds," said a Camelot spokesperson.
"We're aware of what we're doing and our ultimate aim is to raise money for all good causes.
"Charities are one of them. We are aware that charities have been affected, but it tends to be the smaller ones, and those who have their own charity scratchcards."
Save the Children has so far received money for one project from the National Lottery - pounds 379,000 for a scheme working with children on the Langley estate in Rochdale, Greater Manchester.Reuse content