According to the Telegraph, the scheme, which was set up after the July 7, 2005 London bombings, could be shaken up as part of the wider review of the government's Prevent strategy.
The 12.5 million pound project aims to stop vulnerable people falling in to the hands of extremists at an early age.
"There are no plans to abolish the Channel Project. We believe the Prevent programme isn't working as well as it could and that is why we are reviewing it. We want a strategy that is effective and properly focused," a Home Office spokesperson said.
"Part of the review involves looking at the funding of our delivery partners. It is right that we make funding decisions based on value for money for the taxpayer," the spokesperson added.
It is believed the project has already identified over 230 people as being at risk of radicalization.
A boy obsessed with drawing bombs, and a couple who kept their curtains closed were among those reported to police. (ANI)