A total of 11 new playgrounds have already been built throughout the region thanks to the £1 million Playbuilder scheme, at a cost of £600,000.
But the spending is being put on hold because there is no guarantee the cash will be available, leaving the whole project at a standstill.
It is understood the Government has told local authorities to freeze Playbuilder programmes as it plans to cut £65 million nationally, affecting 1,400 new play areas, next month.
Cllr Len Foster, deputy leader of North Lincolnshire Council, said: “I find it amazing that one minute the funding is there and now the whole scheme hangs in the balance and we’ve got to wait another month before we find out what’s happening.
“This council is totally committed to the Playbuilder scheme.
“We’ve already created 11 new play areas which are well used and needed.
“The project aims to encourage more young people to get active and reduce anti-social behaviour, so for the Government to pull the plug now, halfway through, would be devastating.
“Many of the plans are well under way and match funding already sought.
“The Government is telling us that it recognises play is an important part of childhood and child development, and that it is committed to supporting local people to have an active role in shaping play opportunities.
“And yet it’s planning to cut funding.
“It just doesn’t make sense.
“The Playbuilder scheme has many positive benefits. To scrap it when we’ve got this far would be ludicrous.”
The £1.1million scheme was originally meant to create 23 new play areas in North Lincolnshire.
North Lincolnshire Council gave all parish councils the opportunity to apply to receive funding for play equipment in their area.
Funding comes from a £237 million government scheme.
The rural projects now on hold were to be sited in Burringham, Crowle, Keadby, Winteringham, Barton-Upon-Humber and Winterton.
In Scunthorpe there were plans to extend facilities in Somervell Road, Parkwood, Lilac Avenue, Everest Road, Foxhills and Bellingham Road.