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The UK Government is planning to cut the budget of S4C by a quarter over the next four years, according to reports.

The Department for Culture, Media and Sport (DCMS) will cut S4C's £100m grant by 6% year on year, starting in 2011, reports the Media Guardian website.

S4C has already had a £2m cut in its budget this year.

John Walter Jones, chair of the S4C Authority, said he was not aware of any proposed cuts.

The DCMS is trying to save £88m as part of the UK Government's spending cuts.

Mr Jones said: "DCMS has not revealed its intentions for the future funding of S4C.

"In the meantime S4C has been making a number of significant changes over the past 18 months to ensure the channel operates efficiently in the context of a challenging economic climate."

He said the authority had already asked the management of the channel to assess "the implications of any future government cuts to its budget".

The Media Guardian reported that news of the cuts came from "sources close to the channel and to the DCMS".

The DCMS declined to comment, saying that decisions on departmental spending will be set out in the Comprehensive Spending Review, due to be announced in the autumn.

However, the DCMS confirmed that legislation would be necessary if the funding mechanism for S4C was to change.

Shadow Welsh secretary Peter Hain said the cut would "damage the very Welsh businesses who are part of the creative industry sector which is so important for the digital economy Wales must become".

Eleanor Burnham, Welsh Liberal Democrat heritage spokesperson said: "Plaid Cymru will kick and scream calling this an attack on the Welsh language, however, people who do not live in financial fantasy land will accept that cut will have to be made in every department given Labour's shambolic mismanagement of our economy and finances over the last 13 years."

She added: "While this is just speculation at the moment, if these cut have to be made, S4C must ensure that the quality and standard of Welsh language programming are not affected.

"S4C need to make efficiencies in backroom functions to limit cuts in what we, the viewers, see on the channel.

Plaid Cymru's Deputy Assembly Leader Helen Mary Jones said: "If the reports are true, it will not only be a blow for the Welsh language and those of us who watch S4C programming, but it could severely undermine the broadcasting industry in Wales."

Under a format set up in 1996, S4C's budget has traditionally been tied to the Retail Price Index.

The channel received a grant of £101.647m from the DCMS for 2010, and is supplied with news in Wales and soap opera Pobol y Cwm, worth an extra £25m, from the 91Èȱ¬, which is paid for through the licence fee.

Earlier this year S4C defended its viewing figures after it emerged almost 200 shows broadcast on the channel attracted zero viewers.

The channel pointed out that children aged under four were not counted in the official figures annd that the majority of programmes with zero viewers were pre-school children's programmes.