Norwood is to shut its inclusive Hendon nursery for children with, and without, special needs at the end of December because it is only half full.
A spokesman for the charity said that it had been forced to meet over 60 per cent of the costs of the nursery, which is based at the Kennedy-Leigh Centre.
The nursery, which was opened in 2008, was rated outstanding by Ofsted early in 2015 when it had 26 children, four short of full capacity.
One mother with a child there said the closure was "devastating, especially for children with special needs. Some of the children who have to go to other nurseries may need extra care."
Norwood said it was only 40 per cent full last year but despite attempts to improve intake, numbers had increased only to 15 children - 50 per cent.
The nursery was only 40 per cent full last year
"Together with the introduction of new staffing requirements by the local authority, Barnet, this means that it is simply not sustainable for us to continue to run the nursery," the spokesman said.
Fewer than a third of the children currently attending have special needs.
Parents would be refunded for any sessions they did not use, the charity said.
When inspectors last visited, they found that children enjoyed "excellent opportunities to play and learn" with exceptional support from staff.
Norwood explained the nursery had opened with the benefit of Surestart funding from the government, which had since been unavailable for some years.
The charity declined to reveal the cost of its subsidy to the nursery this year.
It promised to "continue to provide high-quality services for young children with special education needs and our full range of child and family support services".
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