Hundreds of vulnerable people across Oxfordshire -- including the mentally ill and elderly -- are facing cuts to vital services they receive.

The county council has warned users of a £10m cut in Government funding for county projects over the next five years.

Money from the county council's Supporting People Budget is given to district councils and funds projects to help the homeless, elderly, mentally ill, teenage parents, refugees, people living with AIDS and HIV, and travellers.

But county councillor Don Seale, executive member for community care and health, said early indications reveal the grant, which was £21m in 2002, will be slashed by half over the next five years.

He is appealing to the Government to rethink the way it allocates its money -- especially as the authority is a so-called "Beacon council" for supporting projects to help vulnerable people.

Earlier this month, Chancellor Gordon Brown revealed he will hand the county a one-off "Brown's Bonus" of £7m to help keep next year's council tax rise as low as possible.

But Mr Seale is at a loss to explain why its Supporting People Budget is at risk of a massive cut.

He said: "We think it has something to do with deprivation in other counties -- Oxfordshire's share looks like getting substantially cut over a period of five years with the money going up north somewhere.

"We were working towards getting a repetition of the grant so we had a bit of a shock when this new formula was produced. There are some quite deprived areas in Oxfordshire -- not everyone is rolling around in money."

He said the solution would probably be found through cuts of some sort, but "not ones that will be felt very deeply".

He said: "There is no doubt about it, there are going to be cuts involved."

"Next year is going to be difficult if there is not repeat of the bonus money we got from the chancellor. But when we get to the years four and five of this regime we are getting into fairly big problems -- we are unsure how we are going to go ahead in those years.

"We are working on the fact it's going to be a cut -- if we can get them (the Government) to rethink I don't suppose we would get all of the money back, but it would be better than nothing."