Becket’s Restaurant, which overlooks the West Front of Peterborough Cathedral, in Minster Precincts, has provided hospitality for thousands of visitors over the years.

One of the reasons it has continued to survive, despite growing competition, is thanks to the Cathedral’s generous rent-free agreement.

But charity law rules have become more strict and the cathedral has now been ordered to charge the café rent in excess of £20,000 a year or risk losing its own charity status.

Urgent discussions are now being held to review the future of the premises, which opened as a lunchtime café in March 2000 following a £2.5 million refit.

It was inaugurated by Prince Charles.

But cathedral officials have stressed they will do everything they can to ensure visitors to their premises are provided with hospitality.

Canon Richard Cattle said: “We are hoping that through negotiations it will be possible to fund the café, and there will remain a hospitality premises in the cathedral grounds.”

Until now, Becket’s, which is one part of a separate trading company (PCE) owned by the cathedral chapter, has been selling dishes in its premises rent free.

But the charity law asks that owners should be charged a commercial rent, a burden the quaint café would not be able to shoulder as it continues to face intense competition from the ever-increasing number of food outlets in nearby Cathedral Square.

Under current charity law, if the chapter continues to subsidise the losses from the café, it will forfeit its own charitable status.

The upkeep of the cathedral cost £1.57 million last year and loss of charity status would mean no more voluntary contributions, business rates on its offices, no gift aid on donations and much more.

Cannon Cattle said: “The impact would be disastrous.”

The process review began on March 10 and is expected to last until the end of the month.

Canon Cattle added: “If no satisfactory way forward is identified during these consultations, Becket’s may have to close.

“In these circumstances all Becket’s staff will, regrettably, have to be made redundant.

“It is important to emphasise that, at this moment, no decision has been made and will not be made until the end of the consultation period.”

Becket’s is housed in the 13th-century extension to the lost Becket chapel, the main building of which was originally built in about 1180, but was pulled down at the start of the 15th century to provide the stone for St John’s Church.

The extension, which was added in 1320, is the only part of the original chapel left, and features large church windows and a high roof among the more modern refurbishment that took place at the end of the last century.