WASHINGTON (Reuters) - The U.S. government-funded Radio Free Asia told hundreds of U.S.-based staff on Wednesday they will be put on unpaid leave from the end of this week after President Donald Trump's administration said it was terminating the outlet's grant funding.

RFA spokesperson Rohit Mahajan told Reuters the administration's move was "unlawful" and said the outlet was pursuing legal action. The news service is wholly dependent on government grants for its operations.

The Trump administration announced on Saturday it was terminating the federal grants that sustain the operations of RFA and Radio Free Europe/Radio Liberty, and that more than 1,300 Voice of America employees were placed on leave in a likely fatal blow to the government-funded outlets. 

RFA has broadcast across Asia since 1996. Rights activists say its multilingual reporters serve as a rare source of reliable news in authoritarian countries, raising awareness about the plight of oppressed minorities such as China's Uyghur Muslims.

Mahajan said the furlough from Friday would mainly affect U.S.-based full-time staff, and reduce the number of people working at the outlet from more than 300 to about 75.

"We have very little funding left to pay our staff. We are trying to keep RFA afloat, as we pursue a legal challenge to the termination of our grant, which we believe is unlawful," he said.

Mahajan said RFA would prioritize exempting from the furlough staff with visas dependent on their employment status, especially those who could face persecution in their home countries. Furloughed staff would receive health care coverage at least through April, he said.

Staff were told the news by RFA management in a town hall meeting on Wednesday.

Participants were told RFA planned to mount a legal challenge similar to that filed by RFA's sister outlet Radio Free Europe/Radio Liberty on Tuesday, according to two RFA journalists who joined the town hall.

A notice of the furlough announcement sent to RFA staff, seen by Reuters, said it was assumed employees would return to work at the end of the furlough period.

The notice added: "because the situation is fluid, we cannot predict how long the furlough may last."

U.S. lawmakers and rights advocates say the funding cuts are a major blow to Washington's hard-earned soft power globally at a time when China is rushing to expand its sphere of influence.

The cuts are part of an unprecedented push by Trump and billionaire Elon Musk to shrink the federal government, which they say wastes U.S. taxpayer money on causes that do not line up with U.S. interests.

In a letter on Wednesday to Kari Lake, acting head of U.S. Agency for Global Media, who announced the funding termination, RFA's CEO Bay Fang said the move had "no basis in law or fact and violates the U.S. Constitution, a litany of federal statutes and regulations, and the plain terms of RFA's grant agreement."

A copy of the letter was provided to Reuters by RFA. The White House did not immediately respond to a request to comment on the letter.

In a post on his X platform last month, Musk called for Radio Free Europe/Radio Liberty and Voice of America to be shut down, calling it "just radical left crazy people talking to themselves."

Trump is seeking to improve U.S. relations with Russia and engage diplomatically with China, where Musk has significant business interests. China's Global Times tabloid celebrated Voice of America's shutdown in an editorial this week.

Asked on Monday if U.S. Secretary of State Marco Rubio supported the move to dismantle RFA, State Department spokesperson Tammy Bruce did not say where the top U.S. diplomat stood on the issue but said the use of taxpayer money was "serious business."

"Right now, it's new, it's a fluid situation, and we'll have more for you as it unfolds," Bruce said.