Pride Toronto faces the loss of its annual cultural grant over indecision as to whether the phrase ‘Israeli apartheid’ should be banned from the event, in a row which Peter Tatchell has called “straightforward censorship”.

Pride organisers in Toronto, which won the bid to host 2014′s World Pride, will not know if they will receive their annual $123,807 (£81,099) grant until days before the festival begins, leaving their plans hanging in the balance.

The possible defunding is being held as leverage against Pride to ban the slogan ‘Israeli Apartheid’, as well as to ban the group ‘Queers Against Israeli Apartheid’ (QuAIA). Similar threats were made to defund Toronto Pride in 2012 and 2011.

Debutantes voted to defer discussion of the matter from April 23 to May 28, with the final decision to take place in June. As Pride begins on June 21, organisers are under enormous pressure to provide for the thousands of festival-goers.

LGBT and freedom of speech activist Peter Tatchell said in a New Statesman piece: “I am amazed that in a supposedly liberal democracy like Canada the country’s main Pride parade can be threatened with the removal of city funding because some councillors disagree with one organisation and one slogan.

“Their demand for a ban is straightforward censorship. It’s a direct attack on free speech and the right to protest – and, some people might say, borderline blackmail.”

He adds: “Lots of people may disagree with QuAIA and even find their rhetoric offensive. But in a democracy they have as much right to free speech as pro-Israeli groups. The main issue is not whether QuAIA is justified in its criticisms of Israeli policy but whether it has a right to freedom of expression.”

QuAIA member Tim McCaskell told Xtra: “This was enormously disrespectful to Pride. It is one of the major summer festivals in the city. To be treated this way is just disgraceful. I can only see this treatment as homophobic.”

Councillor Kristyn Wong-Tam said: “Toronto is about to host the largest LGBT event in human history in 2014 and this is how the city treats Pride Toronto? It’s shameful.”

Deputant Anna Bromberg of B’bai Brith said she supported the ban, as the ‘Israeli apartheid’ message ran counter to what she termed the “core purpose of Pride”. She added: ”This is a city-wide celebration. I am deeply offended.”