Knock-on effects from the scrapping of local welfare schemes in April could cost the public purse hundreds of millions of pounds and drive up homelessness, council chiefs have warned.

Ministers announced the axing of the welfare scheme last December at the time of the local government finance settlement, instead top-slicing £129.6m of councils existing grant for local welfare.

But analysis published today by the Local Government Association shows every £1 spent on the annual £172m local welfare fund helped save more than £2 - with more than a quarter of the 2013/14 spend allocated to help people at risk of homelessness.