Britain's largest care-home provider, Southern Cross, announced last night that it had reached an agreement to secure the care of its 31,000 residents.

The company hammered out the deal in talks with landlords, banks and the Government to allay fears that elderly residents may suffer disruption if the company collapses. The deal may also help to restore confidence in the company, which runs 752 homes.

A company spokesman said the agreement meant "the continuity and quality of care to all 31,000 residents will be maintained and that every resident will continue to be well looked after". He added further talks would take place during the next four months to deal with the company's financial problems.

It is, however, expected that many of its 80 landlords will withdraw their homes from the group and run them independently. It is not yet clear how many landlords will walk away from the group but it is expected that Southern Cross will ultimately be left a much smaller concern.

The company has been struggling under a £202m annual rent burden while its own income falls as public-sector customers, such as local authorities, make cutbacks.