Students and low-paid workers could be left with nowhere to live after a charity announced the closure of its 255-bed hostel.
Bosses at City YMCA said the decision to close its base on the Barbican estate was a "big blow" and that they were trying to find alternative accommodation.
The 16-floor building, which has been leased from the City of London Corporation for 40 years at a reduced rent, provides long-term housing and food for £159 a week. But City officials and the national YMCA have agreed the building will no longer be used from September 30 due to high repair costs.
Gillian Bowen, chief executive of the City YMCA, said: "This move, particularly at this time of heightened youth unemployment, tuition fee increases and a lack of social housing is a mammoth blow to our work in the area."
The City of London has agreed to forgo nearly £2 million in repair costs and is looking to find an alternative use.
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