The Big Lottery Fund had this month announced plans to hand Mermaids UK, based in Yeadon, a Â£500,000 grant to help the charity improve its vital support networks for trans young people and children across the country.
However, after it received "a range of correspondence" expressing concerns - and support - regarding the proposed grant, the National Lottery-funded organisation said it will now undertake a review of the decision to award the cash.
Speaking to the YEP following the Big Lottery Fund's announcement, Susie Green, the charity's chief executive, said it was a "massive shame" that a grant-making organisation had been "subjected to this anti-trans narrative".
It comes just weeks after the YEP spoke to Ms Green, who opened up about her trans daughter Jackie's emotional journey into adulthood and how she had transformed the charity into a national outfit supporting young people.
Jackie, Ms Green and the Mermaids UK story formed part of the inspiration for the three-part ITV show, Butterfly, focusing on transgender issues in the UK and raising awareness.
In a statement, the Big Lottery Fund said: "We have received a range of correspondence in relation to a proposed grant to Mermaids, expressing both concern and support regarding this organisation.
"We’re grateful to those who have taken the time to write to us, and in light of the nature and volume of the communication we have received, we have decided to undertake a review of this grant."
Ms Green said the outcome of the review would now not be made public until after Christmas.
"Mermaids welcomes all levels of scrutiny into the charity and the services that we deliver to families and young people, and are determined to continue to support trans children to achieve a better future," Mermaids UK's statement in response to the decision said.
"We want to reassure all parents that access our support that we will continue to be there for you and your children.
"We are very proud of the work that we do, and would like to thank our supporters, including our individual donors and funders who have made this enormously important work possible."
The statement said it hoped that the review would shine new light on the challenges faced by young trans people and their families.
"Whilst we are disappointed that this is necessary, Mermaids understands that the volume of correspondence, both positive and negative, received by Big Lottery has necessitated a review of the grant that we were notified of last week," the statement added.
"It is unfortunate that transgender children and young people continue to be a largely misunderstood population, and we understand that misinformation about the reality for trans kids is at the heart of this. Perhaps this review will reveal more about the very real challenges faced daily by families and young people, and help to foster understanding and acceptance.
"We look forward to the outcome of this review and will work with Big Lottery to provide them with any additional information they require, as and when needed."