Wagner mercenary chief Yevgeny Prigozhin leaves the headquarters of the Southern Military District amid the group's pullout from the city of Rostov-on-Don, Russia, on June 24. (Reuters file photo)

Britain's defense ministry said on Sunday there was a realistic possibility that Russia no longer funds the activities of the mercenary Wagner Group.

The defense ministry said in a daily bulletin the Russian state has acted against some other business interests of Wagner owner Yevgeny Prigozhin after he led a failed mutiny against the Russian army's top brass in June.

"If the Russian state no longer pays Wagner, the second most plausible paymasters are the Belarusian authorities," it said, adding that this would be a drain on Belarus' resources.

The ministry said the Wagner Group was moving towards downsizing and reconfiguring to save on staff salary expenses at a time of financial pressure.