A local drugs awareness group that works with young people in the city says it will have to close after its funding was cut.
Divert, which is based at Dove House in the Bogside, said it lost the contract to deliver the service on behalf of the Public Health Agency (PHA).
The group has seven staff, five of whom will lose their jobs.
It’s understood the contract was worth about £200,000 to the charity.
It will close on October 1 after the PHA awarded the contract to a charity in Belfast.
Divert, which was established in the late 1990’s, provides alcohol and drug education, prevention and early intervention services across the North West.
Bronagh McMonagle, manager of Dove House, said: “The bad news is that we have lost the service through a competitive tendering process so, as of october 1, Divert will no longer be in existence.
“Not only will five employees be on the unemployment line, you’re also losing around 60 years of experience from the drugs and alcohol sector.
“Two workers will be able to carry their expertise over to the new group - so that’s some kind of positive.”
The Public Health Agency (PHA), in a statement, said: “In line with the Northern Ireland Public Procurement Policy, in October 2014 the PHA issued a number of tenders for the provision of a range of treatment and support services to assist people impacted by drug and alcohol issues.
“All tenders received were evaluated against the selection and award criteria which were set in advance, and contracts were awarded to the providers that achieved the highest score.
“Under the tender process, the PHA focused on ensuring that high quality services were established across the region and is content that contracts were awarded fairly.”