Compassion International will withdraw all of its operations in India next week, leaving 150,000 children worse off.
The Christian charity has been forced to pull out after the Indian government blocked its funding from outside the subcontinent.
Lobbying by politicians including the former US Secretary of State John Kerry has failed to persuade Indian ministers to change their policy, meaning the child sponsorship charity will formally end programmes in India on March 15.
In an email to supporters on Thursday the UK branch of the charity said the move was with a 'heavy heart'.
'We'd hoped and prayed for a different outcome, but we want to thank everyone who stood with us on this journey,' the email read.
It comes after the charity, which funds more than 500 projects based in local churches across India, was placed on a list of organisations needing 'prior permission' to bring in money from overseas. The move blocked $3.5m of aid each month since March 2016, the group said.
Compassion has been operating India for nearly 50 years and its exit is part of a wider crackdown by Indian Prime Minister Narendra Modi's Hindu nationalist Bharatiya Janata party. As a result of this the number of foreign-funded organisations have halved in the last two years, according to the Guardian.
CEO Santiago 'Jimmy' Mellado said he was 'heartbroken' for the 147,000 babies, children and teenagers the charity supports in India and said he was deeply concerned for the 127 staff based there.
'I want to assure you that Compassion has broken no laws in India,' he wrote in a blog post last week. 'We have been and remain committed to abiding by the laws of every country where we serve.
'You may have seen reports from Indian media accusing Compassion of forcing children to convert to Christianity in order to receive the benefits of our programme. That, of course, is simply not true. We partner with local Christian churches to extend the love of Jesus in very tangible ways but we never required a child to convert to Christianity to benefit from our programme. To do so would violate the dignity, freedom and grace that Jesus so freely gives each of us. Our church partners deliver Compassion's holistic child development programme to children in need regardless of race, religion, caste or creed.'
In an earlier email to supporters in December he wrote the 'blockade' against funding was 'no other reason than that Compassion is founded on and demonstrates Christian values'.
