A senior source at the Department of Culture, Media and Sport told The Independent yesterday that the Secretary of State for Culture, Chris Smith, would not sanction a doubling of the grant. Mr Smith was also said to be furious at the board's effort to pre-empt the report by Sir Richard Eyre into the future of opera in London.
That is being published on 30 June. It is likely to call for better funding of the arts as well as cheaper ticket prices and wider access to Covent Garden when it reopens after rebuilding work next year.
On Thursday the board, under new chairman Sir Colin Southgate, wrote to Mr Smith and to the Arts Council which funds the Opera House saying the board would close it down permanently if the grant was not doubled. They added that there was a danger of trading insolvently.
Yesterday a DCMS spokesman said: "No Arts Council client can seriously request a doubling of its grant without that request being subject to the most minute scrutiny."
A senior source at the department later added that Mr Smith was not going to "have a gun put to his head" by the Opera House board, and there was no chance of extra money being given to the Arts Council for a doubling of the grant.
The DCMS and Arts Council will also be looking at the legality of a closure now that the House has benefited from pounds 78m of lottery money towards its redevelopment costs.
The ROH is back in a state of crisis as public as when the Culture Select Committee published its devastating report last year saying it was a "shambles" and would be better run by a "philistine" with business sense than the then management. That report led to the resignations of chairman Lord Chadlington, chief executive Mary Allen and the entire board.
But the new board, under Sir Colin, who is also chairman of EMI, is not only threatening to close the place; its relations with the culture secretary have sunk to a low ebb and it faces the possibility of industrial action by the Royal Ballet and a protest by its back-stage union, Bectu.
Eighty-one dancers at the Royal Ballet were voting on industrial action, likely to be an overtime ban, over pay. They received a below-inflation increase of 1.5 per cent last year and have had no pay increase this year.
In a separate protest, 39 administrative staff in the technicians union Bectu passed a vote of no confidence in the director of external relations, Judy Grahame. Sir Colin and acting chief executive Pelham Allen are known to be highly supportive of Ms Grahame, who has long experience at the BBC and with two London orchestras.
One insider at the Opera House said staff yesterday were in a state of shock, wondering what the House's and their own future would be.