Government plans to withdraw funding for local welfare assistance schemes could put as many as 50,000 people at greater risk of losing their homes, with a potential cost running into hundreds of millions of pounds, the Local Government Association has warned.
Over half of councils report that they will have to significantly scale back or close the schemes if the proposal to halt the £172 million annual funding is confirmed when the local government finance settlement is finalised in February, said the LGA.
The welfare schemes were introduced in 2013 to replace crisis loans and community grants, providing assistance during periods of crisis or transition, including for people facing the threat of homelessness, struggling to put food on the table or setting up home after leaving care.
Local government minister Kris Hopkins announced in December that central government funding for the schemes would end in April this year. The minister said local authorities would continue to be able to offer LWA grants from within their own existing budgets "if they judge it a priority in their area".
New LGA analysis has found that the schemes have helped 94,000 people at risk of becoming or remaining homeless each year.
Some 50,000 would be put at greater risk of becoming homeless by the withdrawal of the funding, with a total potential cost of £380 million a year if housing has to be provided for them all, said the LGA.
LGA chair David Sparks called on ministers to reverse the decision.
"Local safety net schemes have been funded by government for almost 30 years," he said. "At a time when councils are tackling the biggest cuts in living memory, many local areas simply cannot afford to keep these schemes going if government withdraws the funding.
"Government should not renege from its responsibility to those in most need. It needs to review this decision and fully fund local welfare."
Councillor Sparks added: "This money has helped keep a roof over the heads of thousands of people facing the threat of losing their homes. In doing so it has also saved the public purse many millions more which would have to have been spent finding new homes for people who lose their own.
"Government's decision to withdraw this funding is an expensive mistake which will not only lead to a reduction in support for those who need it most, it will also cost taxpayers millions more in the long run."
A Government spokesman said: "This Government gave councils more control because they understand best their local area's needs, and they have proved this with innovative ways to help local vulnerable groups being established across the country.
"This is why we have identified £129.6 million for councils nationally next year to maintain local welfare schemes.
"This is in contrast to the old centralised grant system that was poorly targeted. Councils now choose how best to support local welfare needs - because what is right for Hackney will not be for Hereford.
"One of the most important things we've done is to get Britain building, with housebuilding levels now at a seven-year high, and over 200,000 new affordable homes delivered since 2010.
"But we are far from complacent, which is why I would urge anyone facing financial difficulties to seek advice from organisations like Citizens Advice or Shelter, and why we're making over £500 million available to help the most vulnerable in society and to guard families against the threat of homelessness."