But the organisation responsible for supplying the money claims the system is being streamlined and more fleets will actually benefit.
The Energy Saving Trust (EST) will receive Government funding of £26 million for the 2004/2005 financial year, a freeze on last year's budget.
From that, it has to support the TransportEnergy PowerShift scheme – which helps cover the extra cost of buying vehicles converted to run on alternative fuels – and the CleanUp programme offering grants for older vehicles.
The size of maximum available grants for vehicles will fall by 30% for TransportEnergy and by 25% for CleanUp, but as smaller grants will be offered to fleets, more companies will benefit from financial help.
In the past year, the PowerShift grant allocation ran out with five months of the financial year left.
Philip Sellwood, chief executive at the EST, said: 'These changes have been made following detailed discussion and debate among key stakeholders, customers and industry associations to ensure that the new system can continue to provide real cost and environmental benefits to the customer, assure stability for the market and ensure value for money.
'We have been working closely with the Department for Transport to develop a new system of grant administration that will ensure consistency of grant availability throughout the year, while enabling us to continue helping transform the UK market for cleaner fuels.'
The revised amounts will be based on fixed grant levels for all vehicle categories.
Stakeholders said this system would be clearer to understand and more easily and effectively administered.
Christopher Macgowan, chief executive at the Society of Motor Manufacturers and Traders, welcomed the funding but believes there should be more bias towards the PowerShift programme rather the CleanUp programme.
He said: 'More priority should have been given to the PowerShift programme which drives the development of the cleanest new vehicle technologies. Splitting funds down the middle seems to be an arbitrary compromise without thought of long-term goals.' Manufacturers have also welcomed the additional funding.
A Vauxhall spokesman said: 'We welcome the EST announcement that the Transport Energy programmes have been given the green light. We hope the Government's continuing support for LPG will be reflected in the forthcoming Budget announcement on fuel duty.'
Chancellor of the Exchequer Gordon Brown is also expected to announce a three year rise in fuel duty for liquefied petroleum gas in next week's Budget.