As a result the publication will have to continue its fundraising efforts before it can print another magazine edition, but will continue to provide its news online.
Journalism.co.uk reported in March that the Star originally made three applications to council committees for funding, one of which was rejected for not meeting the council community committee's criteria.
The Star's appeal was rejected by the council's cabinet this week. The council told Journalism.co.uk that it stood by its previous statement that the Star did not meet the community committee's criteria by breaching the guidelines on balanced reporting and offensive language.
"The council has a city wide network of community committees with devolved funding and the ability to determine how it is spent," Sue Lightup, Salford City Council's strategic director for community, health and social care said in a statement.
"It is a matter for each community committee to decide how it does this and whether applications meet the criteria for funding. We received our first application from a publication for community committee funding in 2007 and as a result we put in place some guidelines so that we can demonstrate fairness and transparency when deciding on funding applications. These are the same guidelines we're using today and all applications for funding are considered as part of a formal process involving the relevant community committees."
According to an internal report from a council meeting in March, as reported by the Star and seen by Journalism.co.uk, the original application was rejected on grounds that the Star is overly political in nature and is "perceived by many to be a satirical publication which tends to criticise authority in partic [sic] singling out Salford Council and individual councillors".
In an article published by the Star this week, which claims to include "edited highlights" from the community committee's rejection of the appeal, editor Stephen Kingston says the magazine is again accused of being unbalanced in their reporting and "overtly political".
"To say that we only concentrate on Salford Council is untrue," he is quoted in the report. "What we do is look at the Council in great detail because the Council is the accountable body for most of these organisations. We've done loads on NWDA, and on Pathfinder and the University."
He adds: "It's a game of cat and mouse when you're a journalist – you have information you don't want us to see and it's up to us to dig it out – accountability is what we're here for. Part of the reason the Salford Star was set up was to make public bodies more accountable.
"But the main thrust is that you're saying we're not balanced and we don't quote people who we feature. But I've got evidence here of every single article mentioned in that report with direct quotes from the Council or whoever we're on about."
Speaking to Journalism.co.uk, he said he was not surprised by the rejection.
"We didn't expect the appeal to work," he said. "We took their evidence and absolutely trashed it and then they moved the goalposts."
According to the publication's account, councillors also voted to reject the appeal as no other magazines in the area are funded with public money.
Note: The story has been updated following confirmation from Salford Council relating to the grounds for rejection.