Unless the confusion in Whitehall between the competing demands of the Department of Social Security (DSS) and the Department of the Environment (DoE) is resolved, charities fear about 1,500 destitute people a year will lose their places of shelter.
Last week, homelessness organisations were in near panic as they realised the consequences of the Government's plans to transfer responsibility for community care from the Departments of Health and Social Security.
Local councils say they may well not be able to maintain funding after the switch takes place on 1 April - the same time that Sir George Young, the housing minister, will launch a 'rough sleepers' initiative' aimed at moving people off the streets.
All the major organisers of registered hostels for the homeless, which provide specialist care in London, said they faced a 75 per cent drop in the money they received per resident and would have to start closing buildings if there was no change in policy.
At present the DSS automatically pays between pounds 200 and pounds 210 per week for anyone in a registered hostel. The money covers accommodation (about pounds 50 a week) and supplying food and care ( pounds 150 a week).
From 1 April, the DSS will continue to pay the rent, but it will be left to councils' discretion to assess each new inmate and decide whether to meet all, part, or none of the pounds 150 food and care costs.
Last week, in inner London, the borough of Kensington and Chelsea told the St George Community Trust, which runs three homes, that it will 'face particular difficulties' when the system changes. Alone In London - which tries to get homeless teenagers off the streets around King's Cross - met Islington Council on Friday and got no guarantees of future funding for beds for drug users and the mentally ill. Westminster City Council told the St Mungo Association, which helps mentally ill men forced on to the streets by the asylum closure programme, that it will fund beds only for men with a three-year link with the borough, which few of its itinerants have.
The looming crisis is caused by a gap in funding. The Labour-controlled Association of Metropolitan Authorities estimates that the amount transferred to councils for community care is pounds 250m short.
Bryan Symons, director of the St Martin of Tours Housing Association, who is co-ordinating the campaign to make the Government think again, said that with local authorities concentrating on providing care for the elderly and mentally ill it was impossible to see how cities with exceptional homelessness problems, like London and Manchester, could help fund hostels.
'The homeless are being put at the bottom of councils' priorities,' he said.
There are 550 beds in general registered hostels for the homeless in London and about 200 in the rest of the country. Turnover is rapid; conservative estimates put the number of homeless housed and treated at between 1,500 and 2,000 a year.
Homelessness charities could try to avoid closure by replacing intensive care with a cheap service which merely provided a housing benefit-funded bed for the night.
But Mick Carroll, spokesman for the St Mungo Association, said: 'We need to get people to doctors, get wounds treated and make sure they eat. We don't want to . . . just leave them to rot in their beds.
'Why can't the Government bugger off and leave us alone?'