maximum number of fans at matches standing at 4,684.
The council have said the cut was due to a poor standard of stewarding and a lack of a pro-active approach to safety.
It follows a pitch invasion after the Barnet game, which saw the clubs stewards come in for critisim from supporters for their handling of the situation.
There were reports that young supporters were subjected to man handling and even reports local photographer Dan Westwell was beaten up by a group of stewards as he tried to leave the ground.
Sue Storey from the authority's emergency planning team told the BBC: "We've had concerns for some time.
"We've been giving the club the opportunity to develop stewarding and they introduced a new training regime for stewards at the start of the season.
"Unfortunately what we saw on Saturday was not really a demonstration of good-quality stewarding."
"This reduction affects all ends, so the stand which takes the away supporters will also have a 50% reduction. That will bring it down to about 955 which will have an effect for some of the local clubs who may want to visit."
James Derry, the Stags club chairman said in response "I am disappointed the council went ahead with this without even having a conversation with us.
"I was not even aware of it until I had phone calls from the press as I am down in London today.
"I think it is a bit premature as there are no more home matches this season and we have already stated we are holding an internal inquiry tomorrow (Thursday) after which we will be making a statement.
"If people have acted improperly then they won't be at the club any more. We are taking this very seriously."
It is yet another crisis for the club, who simply can't get things right of the field, and is another nail into the coffin of an horendous season.