A Government crackdown on charities using taxpayers' money to lobby ministers has been branded "draconian" and led to claims it was an attempt to gag organisations raising concerns about policies.
A clause inserted into new and renewed grant agreements is aimed at making sure that taxpayers' money is spent on improving people's lives and good causes, rather than lobbying for new regulation or increased funding, the Cabinet Office said.
The Government insisted the clause will not prevent charities and other organisations in receipt of Government grants from using privately-raised funds for lobbying campaigns.
Cabinet Office Minister Matthew Hancock said: "Taxpayers' money must be spent on improving people's lives and spreading opportunities, not wasted on the farce of Government lobbying Government.
"The public sector never lobbies for lower taxes and less state spending, and it's a zero sum game if Peter is robbed to pay Paul.
"These common sense rules will protect freedom of speech - but taxpayers won't be made to foot the bill for political campaigning and political lobbying.
"This Government is standing up for value for money, so we can keep taxes down and support better services that people can rely on."
The system has been trialled in grants provided by the Department for Communities and Local Government and ministers insisted it had not curtailed the ability of charities such as Shelter from lobbying on housing legislation.
But Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, warned the new rules could force charities to take a "vow of silence" and urged ministers to reconsider the plan.
He said: "Charities provide vital insights and expertise which improve policy-making and often help save or better target taxpayers' money.
Charities are already subject to charity law and guidance on campaigning that does not permit party-political campaigning.
"The new rules attached to grant income would appear to prevent charities from suggesting improvements or efficiencies to civil servants or ministers, or even from raising concerns with MPs, for example about the treatment of vulnerable people.
"Indeed, several Government departments have developed 'strategic partner' grant programmes specifically to enable them to access the expertise of charities to inform their policy development and delivery for these reasons.
"This is tantamount to making charities take a vow of silence and goes against the spirit of open policy-making that this Government has hitherto championed.
"We call on ministers to reconsider this draconian move that could have significant consequences for the charity sector's relationship with Government. I trust Government will consult further on this."
Shadow minister for civil society Anna Turley said: "This is an outrageous attempt to further curb the independence of charities and restrict their ability to speak out on issues of failing government policy. It has not even been put before Parliament so that it can be debated properly.
"Yet again we are seeing the actions of an illiberal Government who are scared to debate their record or be open to scrutiny."
She called on ministers to perform a U-turn on the "gagging clauses", adding: "They should be open to the legitimate views and ideas of civil society, who are the ones who have to deal with the failings of Government policy, not ride roughshod over them.
"For the sake of a decent and transparent democracy I urge them to reconsider."
Right-of-centre think tank the Institute of Economic Affairs (IEA) has repeatedly raised the issue of charities and organisations using public funds to lobby the Government.
Christopher Snowdon, the IEA's head of lifestyle economics, said: "This is very good news for taxpayers who will no longer be forced to pay for the Government to lobby itself.
"At every level - local, national and European - people have been subsidising political campaigns that they may not know about and might disagree with.
"Campaigning is an important part of a thriving democracy but charities and pressure groups should not be doing it with taxpayers' money."