Some 42 full-time posts will be lost when the United Kingdom joins the European Southern Observatory consortium.
Jobs will be lost at the Joint Astronomy Centre in Hawaii, home to the James Clerk Maxwell telescope, and the Isaac Newton Group of telescopes on La Palma, as overseas commitments are reduced to meet the cost of entry.
Membership terms were agreed by the councils of Eso and the Particle Physics and Astronomy Research Council last week.
The move is supported by most UK astronomers and will give them access to the world's foremost optical/infrared instrument, the Very Large Telescope.
The government has agreed to allocate £10 million per year for the next decade towards Eso, while PPARC will contribute a further £5 million annually. This sum will be found from savings.
Fears that this would involve shelving plans to upgrade the Merlin radio telescope network, which includes the 76m Lovell telescope at Jodrell Bank, have been allayed. The £7.8 million e-Merlin project will be backed by a consortium of three universities - Manchester, Umist and Cambridge - and a £2.5 million contribution from the North West Development Agency. PPARC will continue its funding of the network at current levels.
Merlin director Philip Diamond said the upgrade would make the seven linked radio telescopes 30 times more sensitive by 2007.
"This will enable e-Merlin to probe far deeper into the universe, achieving in one day what would currently take three years of continuous observation," he said.
However, the axe will fall on other UK astronomy projects.
PPARC will withdraw support for the Anglo-Dutch 1m Jacobus Kapteyn Telescope, and funding of the Anglo Australian Observatory will also be run down. But the 4.2m William Herschel Telescope is secure.