London Councils has claimed that suggested changes to the Homelessness Prevention Grant could lead to an overall reduction of 32 percent in funding for local authorities across the capital - equivalent to losing £50 million.

But a government spokesperson said that’s “a total misinterpretation of the figures”, which are “purely illustrative” and £150 million has been given to councils across Greater London this year.

“The capital already faces the most severe homelessness crisis in the country, and it is about to get worse as the cost-of-living crisis deepens into the autumn,” said councillor Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing and Planning.

“Although we agree with the government’s ambition of simplifying how homelessness services are funded, it makes no sense to reduce London’s overall level of resources.”

An estimated 150,000 homeless Londoners live in temporary accommodation arranged by their local borough – including 75,000 children. The capital accounts for around 60 per cent of England’s total number of homeless households in temporary accommodation, London Councils said.

Meanwhile spending to tackle the issue in London has increased by over 120 per cent from £560 million in 2010-11 to £1.2 billion in 2020-21. London accounts for 60 per cent of expenditure nationally.

The Homelessness Prevention Grant is the main source of funding for local authorities to tackle and prevent homelessness.

Two proposed options would both result in reduced resources from 2023, despite London having the highest homelessness rates in the country, London Councils said on Friday.

A second option outlined in the consultation would lead to a reduction of six per cent, which boroughs say would still undermine their homelessness prevention work.