Composers including Harrison Birtwistle, Peter Maxwell Davies and Mark- Anthony Turnage condemned the society for axing the subsidy, which they said would cut the UK live-performance income of British composers by about 45 per cent.
The PRS replied that subsidising a single musical form could not be defended, particularly as only 11 per cent of the money concerned went to living British composers. The society hopes that its new charitable foundation, to be launched in January, will go some way to replacing the subsidy, of around pounds 1.4 million a year, which is due to end in 2003.
David Bedford, a classical composer and PRS deputy chairman, said the foundation would not only give grants to composers but would also fund the performance of new works.
But Mr Bedford, who also orchestrated Mike Oldfield's Tubular Bells, said the aim was to encourage all forms of music.
Michael Berkeley, the composer and broadcaster, said the foundation would not tackle the main problem caused by axing the classical music subsidy.
The PRS needed to look at other ways to help classical composers, such as amending a rule whereby the rates paid for broadcast music was the same regardless of the length of the piece.
"It's ridiculous that you get the same amount of money for a three-minute guitar piece as for a 20-minute symphony," Mr Berkeley said. "This hits classical music people because they tend to write longer pieces."