From April 1996 there will no longer be a separate fund for private sector renewal. Instead applications for grants from householders will have to compete against other council priorities such as education and social work.
Shelter is concerned that schemes like Care and Repair that assist older households to access grant aid and arrange work on their behalf could be affected.
Care and Repair clients are generally on low incomes and the effectiveness of the scheme depends on relatively high levels of grant to make the work affordable.
Director of Shelter Liz Nicholson said:
'In recent years local authorities have put hundreds of millions of pounds into housing improvement in the private sector. A lot of this money has gone to help people who have very low incomes living in seriously sub-standard housing.
'Elderly people have been assisted to remain in their own homes. Children have been able to grow up in healthy homes.
'Investing in repair and improvement of existing stock also makes economic sense. If we seek to cut costs today, we will simply face the much higher costs of demolition and rebuilding tomorrow.'