Patrick Deuchar, chief executive of the Royal Albert Hall, said that the South Bank Centre, which runs the Royal Festival Hall, was using public subsidy to lure stars like Shirley Bassey.
They could afford to offer promoters cheaper rates to hire their hall, he said, because they used public money to do so. But, he added, this money was given by the Government to put on classical music and new and experimental work, not big-name commercial artists.
Many of these have been pop and rock stars. Among artists who have appeared recently at the Royal Festival Hall and used to appear at the Royal Albert Hall, are: Art Garfunkel, Elvis Costello, BB King, Joe Jackson and Ry Cooder.
Mr Deuchar said yesterday: "I'm not concerned about competition as such, but it does become a bit unfair when an institution has a significant amount of public funds to fling about and they can offer significantly lower rates for the hire of their hall. Shirley Bassey, for example, was a regular performer at the Royal Albert Hall, but now she has been offered lower rates to appear at a publicly subsidised venue.
"It really bothers me that individual venues should be out there undercutting in a way that other halls can't offer. Public subsidy was not intended for this. There are a number of commercial venues in London from large ones like ourselves to smaller ones, like the Shepherds Bush Empire, which face losing performers. The whole stability of the London concert scene is now under threat."
The Royal Albert Hall receives no public subsidy, and it is hoping to win lottery money for a complete refurbishment and redevelopment which would also be partly funded by box office receipts. Mr Deuchar said the Royal Festival Hall's poaching of artists could harm these plans.
While Eric Clapton, who plays 12 nights each year at the Royal Albert Hall, is so attached to the venue that he would not be tempted elsewhere, nearly every other pop and rock star who plays the Hall is open to persuasion. It is highly unusual for the head of one major concert hall to attack another publicly in this way, but it is a sign of the increasing competition among venues in London.
The South Bank Centre receives a pounds 13.3m Arts Council grant. The general director of the South Bank Centre, Nicholas Snowman, said last night: "The Royal Festival Hall has always been in demand by a wide range of performers. In the past, Jimi Hendrix, David Bowie, Pink Floyd, the Pet Shop Boys and Frank Sinatra have played there.
"The Royal Festival Hall is let commercially and will continue to be a major international flagship for the arts, providing first class concerts for everyone."
An Arts Council spokeswoman said: "We are here to see that some of the highest quality art is put on at the venues who receive our money. But when we give the grant we are not specific about what they can spend the money on."