The charity, which relies heavily on public funding, was allegedly told by Government officials it would not receive £3m in funding unless she was replaced.
The Government reportedly has concerns over mismanagement of funds at the charity.
The prime minister's spokesman told the BBC that the Cabinet Office had requested changes to the charity's management structure "to ensure that their work is put on a sustainable footing".
Ms Batmanghelidjh has denied that the charity has been mismanaged, telling BBC Radio 4’s Today programme that the claims are a ‘red herring’ to avoid the ‘real issues’.
She said, ‘This is briefing to avoid the real issues. I’ve repeatedly challenged various governments on the fact that they’re not protecting children robustly.’
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