Children's Minister Katherine Zappone is suspending all State funding to Scouting Ireland as she ramps up pressure on its directors to resign.
At a press briefing outside her department, the minister said she was "very concerned" to learn about the decision last Saturday to reinstate chief scout Christy McCann as chair of the upcoming extraordinary general meeting.
Mr McCann is one of four volunteers under investigation over Scouting Ireland's handling of a 2016 rape allegation.
He stepped aside in April pending the findings of the ongoing inquiry.
Ms Zappone received correspondence from the interim chair of the board, Annette Byrne, and from child safeguarding expert, Ian Elliott, which caused her "grave concern".
She said funding will be suspended as long as the board of directors remains in place.
"The interim chair has indicated that she can no longer stand behind assurances previously given to me with regard to the delivery of future change essential to ensure the robust governance of the organisation," said the minister.
"Indeed, she has indicated that, based on the decision taken last Saturday, she cannot have confidence in the current board to act impartially when the current independent investigation is completed."
The minister said Mr Elliott was "appalled" by last Saturday's decision and said he pointed out his "strong view that bad governance generates risk" to young people.
"It is plainly wrong that any publicly-funded youth organisation would be led by directors who do not put the interests and safety of young people to the fore," she said.
Ms Zappone said it was a crucial moment for Scouting Ireland and urged the directors to do the right thing.
She also wanted to reassure parents that the actions she is taking stem from "bad governance" and are in no way connected to the "fantastic work" being carried out by Scout groups, leaders and volunteers throughout the country.
Scouting Ireland said its board was meeting last night to discuss the matters
"Scouting Ireland must be above reproach regarding governance and safeguarding," it said, adding it had a pathway to put in place robust structures.