Councils on the south coast, North Yorkshire and Lancashire will be hardest hit.
Between 1993-94, the first year of the new community care funding arrangements, the allocation was based partly on standard spending assessment but also partly on the level of income support previously paid to residential and nursing homes in the area.
This was intended to prevent the collapse of independent homes and favoured councils with a high number of private homes.
Stephen Campbell, undersecretary for social services at the Association of County Councils, said there was no consultation about the change, which has hit counties hardest.
John Ransford, director of North Yorkshire CC's social services, stands to lose £3 million from his budget. 'We always knew the formula would change over time but we always understood that there would be a gradual slope over three years', he said. 'It's almost certainly true private homes will go under'.
Peter Smallridge, director of Kent CC's social services, will lose £4.7m. He admitted his county was over provided with residential beds but the sudden shift in resources had come as a surprise. 'They've just dumped it on us', he said.
A Department for Health spokesperson said ministers had always made it clear the allocation formula would be kept under review. Most mets will gain. Sheffield City's special transitional grant for community care rises by £4.8m, Birmingham and Leeds City's by £4m.