Councils have urged the Government to rethink a decision to scrap a £347 million fund used to provide emergency support for households.
The Local Government Association (LGA), which represents authorities in England and Wales, said the fund was used to help families faced with being made homeless and paid for food vouchers for those struggling to afford meals.
The organisation said it was "extremely disappointing" that the latest funding settlement for councils revealed that the fund would not be renewed in 2015.
Some families in Surrey forced out of their homes during this year's floods were assisted with food, clothing, new bedding and utilities using the fund, the LGA said.
LGA chairman Sir Merrick Cockell said: " This fund has been used by councils to provide crucial support to people facing personal crises in their lives, from help paying the rent to putting food on the table.
"By helping people at an early stage and targeting support at where it is needed most, we have been able to give essential support in people's time of need and prevent short-term problems escalating.
"It is extremely disappointing that Government has removed the funding for this safety net without first honouring it promise to discuss with councils what the consequence of such a move might be.
"Early indications suggest that this scheme is working well, and has been far more effective at getting support to those most in need than the Government crisis loans scheme which it replaced.
"Local authorities are working hard to support the most vulnerable in society while managing the biggest cuts in living memory to funding for services. For some councils, providing crisis payments to those in need from local service budgets is likely to be a stretch too far.
"We urge Government to work with the LGA and councils to review the fund with an open mind about its future."
A Government spokesman said: " Councils will continue to provide support to those in their community who face financial difficulties or who find themselves in unavoidable circumstances.
"In contrast to a centralised grant system that was poorly targeted councils can now choose how to best to support local welfare needs within their areas - what is right for inner London will not be for rural Cumbria.
"The Government continues to provide support to local authorities through general funds as part of the Government's commitment to reducing ring-fencing and ending top-down Whitehall control."
Shadow local government secretary Hilary Benn said: "The Local Government Association is right to warn of the damaging impact of axing this fund on the poorest and most vulnerable.
"Under this Government, hundreds of thousands are being forced to rely on food banks to survive. Labour would act to help hard-pressed families by freezing energy prices, helping more employers to pay the minimum wage and scrapping the bedroom tax."