The Seudan Beaga Gaelic private day care nursery in south of the city takes a maximum of 26 children, but offers care from 8am till 6pm, making it particularly attractive to working parents who want their children to learn Gaelic.
Parents have been happy to pay for their children to attend in anticipation of a funded place when they turned three, in line with Scottish Government policy.
Working mother Jo Pirie's son Oscar has been attending the nursery in Cathcart since August last year.
The former BBC producer, who now has her own business, said "Since January his place has been funded because he was three. So we turned up at the Gaelic nursery two weeks ago fully expecting Oscar to have the finding for his place to continue until he is school age. But we were told by the manager that funding had stopped."
Ms Pirie, of Pollokshields, said the original intention was for her son to go to the council-run Gaelic nursery at Glasgow's Gaelic school, but Seudan Beaga was the only facility that allowed her to work full days.
She said: "I went back to the council, but there are no places left. So it's a disruption. We don't know whether to continue with Gaelic, pay ourselves or get him into another nursery.
"I think it is appalling at a time when the Scottish Government is supposed to be putting so much money into Gaelic."
Teachers Laurie and Anne Curran had a similar experience. Mr Curran said he had received promises that their three-year-old son Michael's place would continue to be funded until he went to school.
He said: "We had not heard a dicky-bird about any problem until August 1. He had been going since August last year."
The couple had wanted Michael to be exposed to Gaelic because he was already being brought up bilingually as Mrs Curran is German. They had been very pleased with Seudan Beaga but have now been phoning round looking for any possibility of a nursery place elsewhere. "There are just no funded nursery places in Glasgow," Mr Curran said.
He said the couple needed three full days' nursery as he works in East Renfrewshire and his wife in Ayr.
"The council says it will offer part-time nursery. But that means 9am to 12 on Monday and 2pm to 4pm on Wednesday, so that's just not any use to us."
He said they now faced being £1,300 year worse off over the year.
Glasgow City Council said the decision was communicated to the nursery early this year. It added the number of places at its own nurseries was increasing, and that it would spend significantly more on places in partnership nurseries.
Seudan Beaga is one of a handful of establishments that lost partnership status with the council because it failed the procurement process altogether.
A council spokesman said: "We established a procurement process with clear criteria."
The nursery, whose name means Little Jewels or Gems, was set up by businesswoman Marianne Rodgers, who is from Barra. In 2009, Mrs Rodgers told a newspaper she launched it because she could not find a Gaelic nursery for her children.
She could not be reached for comment yesterday.