Abingdon is to be given £345,000 to determine whether flood prevention measures could work. In July, the Environment Agency decided not to apply for a Government grant for its preferred flood prevention options as Abingdon was not one of the worst-hit areas during the floods of July 2007.

But the agency has now said it would spend £345,000 on a feasibility report for Abingdon to determine whether measures such as building walls and embankments along the River Ock, creating flood storage areas upstream of the town and knocking down the disused St Helen's Mill Bridge would work.

These preferred options score 4.1 and 4.7 on the EA's benefit-to-cost ratio, but it does not apply for Government grants when the score is below five.

They would cost between £3m and £3.5m to implement.

The money for the report has been raised through a local levy — a £10m central pot collected from local councils and distributed by the Thames Regional Flood Defence Committee.

The report will be finished in September next year.

Peter Ryder, chairman of the regional committee, said "The local levy we have set enables us to identify and finance projects that will benefit local communities at risk of flooding, but which are not of the highest priority nationally.These are often small scale, but of huge significance to those at risk."

David Huchinscor, 84, of Crosslands Drive, said: "If this means they will do something to help stop flooding then the money should be spent. It's terrible as you never know when this rain will break and you think, 'Oh dear, flooded again'."

Malcolm Moor, chairman of South Abingdon Floodplain Action Group, feared the levy was insufficient for the Thames catchment area which covers nine counties, and London.

Mr Moor, of Ock Mill Close, said: "Much of Abingdon was brought to a standstill during the July 2007 floods with Ock Street impassible, which must have had a severe impact on our local economy in addition to the misery and costs for the hundreds of homes affected.

"A repeat of those floods during the present economic downturn could hurt local businesses even more — so effective flood prevention is urgently needed now.

"I think this is a good time for Abingdon to urgently push for action and for the Government to back up its promises of help with hard cash."

According to the EA, 433 homes and 21 businesses in the town were flooded in 2007.

Town councillor Samantha Bowring, who was flooded out of her home in Turberville Close, said: "Obviously I welcome any increase in funding to help flood defence work. But this does not get away from the fact Government funding for flood prevention remains woefully inadequate."