The London Assembly is to investigate the “scaling back” of this year’s World Pride London event.
Organisers had been granted the the free use of Trafalgar Square and up to £100,000 of funding from the Mayor of London.
However just 10 days before the event they announced a shortfall in funding and scaled down their plans.
A maximum of 25,000 attendees are estimated to have taken part in the event, down from audiences of around 800,000 in previous years.
The Assembly’s Oversight Committee is now to investigate the scaling-back the event and the role of the Mayor and London and Partners in supporting Pride.
Announcing the investigation, Committee chair Len Duvall said: “Instead of being proud to host World Pride in 2012, London was left with the embarrassment of a much reduced event surrounded by confusion and an apparent lack of careful financial monitoring.
“Our investigation will look at what went wrong and, more importantly, how such fiascos can be avoided in the future. We must be sure that when the Mayor puts taxpayers’ cash and the city’s reputation on the line risks are minimised.”