Labour leader Ed Miliband accused the coalition of being mean-minded over the scheme and called on the Prime Minister to clarify how much Government support the Booktrust scheme would now receive.
The charity had been expecting to see a 20 per cent cut in its 13m-a-year Government grant, only to be told that it would be losing the entire sum.
But following a furious backlash from authors, the Department for Education announced it would continue to fund the charity's book-giving programme.
It said: "Although the current contract will end in April the department is talking to Booktrust about how to develop a new programme which will ensure that every child can enjoy the gift of books at crucial moments in their lives while ensuring we develop an even more effective way of supporting the most disadvantaged families to read together."
Mr Miliband, MP for Doncaster North, has written to Mr Cameron calling on him to explain just how much of its original grant Booktrust would retain.
He said: "The Department of Education appears to be starting to backtrack amid the outcry from parents, children and authors. But there is no clarity at all.
"It now falls to you to get a grip on this fiasco and provide some reassurance that a scheme on the lines of the current programme will be maintained, with a clear statement about the amount of investment that will be provided."