NAOMI House hospice for terminally-ill children has suspended its outreach service, following uncertainty over frozen cash deposits in Iceland.

The Hampshire hospice has raised funds in the Liphook and Haslemere areas and works in close

co-operation with the Chase hospice in Guildford.

However, its future has been in jeopardy since news that £5.7million of the charity's deposits were frozen in the Icelandic bank Kaupthing Singer & Friedlander.

The Naomi House board of trustees met on Tuesday night, and unanimously decided to suspend the Hospice at Home service which covered a large part of the county.

The service consisted of a small team of skilled nurses and carers, providing emergency and crisis care for ill children at their own homes.

A spokesman for Naomi House said: "Plans had been agreed to extend the service and offer more families the reassurance of emergency respite support in their homes.

"Now this will not be possible until the funds held in the Icelandic bank are released. It is a devastating blow for families who often have no alternative way of coping in a crisis."

Sue George, whose daughter Holly visits Naomi House regularly, said: "When my husband was rushed into hospital I simply would not have coped without the help we received from Naomi House.

"The staff were amazing,

I knew they understood Holly's needs and would care for her just as I would myself."

She added: "Their support meant I was able to be at the hospital without worrying about Holly and her needs.

"That is invaluable when you have a child with complex care needs like Holly."

Professor Khalid Aziz, chairman of Naomi House, added: "Many families face dilemmas like the George's, and we pride ourselves in our ability to respond to their needs, especially at the most difficult times when they have no one else to turn to.

"Now, as a result of a situation not of our making we cannot deliver a vital service that we usually provide.

"We simply cannot accept that the UK Government will let this situation continue and we urge that they give assurances that our funds will be returned in full, immediately.

"For a relatively small sum of money the Government could make a huge difference to families like the George's."