Telford College of Art and Technology is to shut its Sticky Fingers Nursery, which is attended by more than 30 children.
Cindy Cairney, acting manager, said, 'It is very sad, as some members of staff have been here for 20 years. I have been here for 13 years and we were only told last week that the nursery is closing at the end of term.
'We had revamped the prospectus and started planning for the autumn term. We would have liked to have been told earlier, as we could have tried to tighten our budget.
'I don't know what the parents planning to come back in September are going to do now for childcare. They are so upset about this. One parent has started a petition and has already got well over 300 signatures.'
The college attributed the closure to a national reduction in funding. It has promised to support nursery staff in finding other work.
Meanwhile, Sussex University nursery is also under threat, although the university which subsidises it has confirmed that on-campus childcare will continue for 2010-2011.
The nursery has operated for 30 years and is rated outstanding.
A spokeswoman for the Save Childcare at Sussex campaign said, 'Having decent childcare on campus enables student parents to pursue their degrees. It also allows staff to return to work relatively early, thereby saving the university from having to find maternity replacements.'
The parents' group has submitted a report with cost-cutting measures in a bid to keep the nursery open.
Charles Dudley, director of residential, sport and trading services, said the parents' ideas were constructive, 'but financially they fall significantly short of where we need to be, since they do not seek to meet the full costs of childcare. They remain under consideration, while discussions with potential external partners continue.
'When we are in a position to put forward a final set of proposals, there will be full discussion with staff and parents before any decision is reached.'