The future of the high-profile Australian Film Institute Awards has come under serious threat as cuts in funding continue to undermine confidence.

Two years of uncertainty have weighed heavily on the Australian Film Institute (AFI). The organisation has already halved its staff, closed its library and will have finished returning all the features, shorts and documentaries that it once distributed to their respective producers by June 30.

Funding was withdrawn from the AFI's distribution and information services in December 2000, when the Australian Film Commission (AFC) decided to redirect resources into its own core function of industry and practitioner development.

While the AFC's commitment to the awards has never been questioned, the financial instability that was a consequence of those cuts is now threatening the awards.

The future of the awards - and of the AFI itself - will become clear if the government of Victorian decides to go ahead with its three years of sponsorship, promised - and required - to keep the event going in Melbourne. Film Victoria and the Australian Film Commission are reported to have requested an independent financial assessment to ascertain the status of the AFI's finances.

Following the reported resignation of a number of board members late last year, AFI chief executive Deb Verhoeven left the organisation in February and the issue of her replacement is also likely to have a big impact on the future of the body.