The head of Slovenia's STA news agency has resigned, accusing the government of putting pressure on the company.
Bojan Veselinovic said that Slovenia was trying to "subordinate" the national news agency by blocking its public funding.
"I cannot accept the conditions imposed," Veselinovic added in a statement, saying that the STA "has been working for free for 273 days."
Slovenian Prime Minister Janez Janša had been calling on the agency's director to resign.
But the EU has expressed "serious concern" following the announcement of Veselinovic's resignation.
"We regret and follow with concern the latest deterioration of the situation," European Commission spokesman Christian Wigand told reporters.
"We urge the Slovenian authorities, the Slovenian government, to take decisive action to stop and reverse the current trend."
"The developments show, unfortunately once again, the need for EU legislation to protect media freedom and pluralism."
Since returning to power in 2020, Janša has been accused of attacking journalists on Twitter and undermining press freedoms.
He had described the STA as a "national disgrace" and threatened to withdraw its government funding.
Janša -- a close ally of Hungarian Prime Minister Viktor Orbán -- has criticised Slovenian media for their coverage of his management of the COVID-19 pandemic.
Last December, the annual payment of two million euros to the agency was suspended over legal disputes. Under pressure from the EU, the government said in January that it had resumed payments.
But the STA has repeatedly accused the country's government of violating "freedom of the press".
"The substance of the dispute has always been linked to the government's position on media independence and its desire to subordinate the agency," Veselinovic said on Thursday.
In a letter to the government last week, European Commission Vice-President Věra Jourová reiterated calls for the restoration of STA's funding.
Jourová warned that the current situation "poses major risks for media freedom and pluralism in Slovenia and consequently in the EU". Slovenia's Janša currently holds the rotating EU Presidency.
The Association of Slovenian Journalists organised a donation campaign that raised €270,000 euros to help the STA survive, but the agency requires far more funds to continue operating.