More than 170 councils have urged the Chancellor to provide more money for vulnerable people struggling with the cost of living when he announces his Budget this week, warning that withdrawing support could leave communities facing a “cliff-edge” in provision.

Council leaders from across the political spectrum have written to Jeremy Hunt asking him to “urgently extend” the Household Support Fund (HSF), which is due to expire at the end of March.

Last week, almost 90 parliamentarians wrote to Mr Hunt to make the same request.

Started in 2021, the HSF has provided £2.5 billion of welfare support via local authorities to help vulnerable people with food, water and energy bills.

But the Government has not confirmed whether councils will receive funding beyond March 31.

Co-ordinated by the Local Government Association (LGA), the letter from councils asked for the scheme to be extended for at least another year, saying the HSF has provided “a vital safety net for residents who are struggling to afford the essentials”.

“Local services are experiencing record demand for local welfare support,” local authority leaders wrote.

“We are therefore deeply concerned that ending the fund on March 31 will create a cliff-edge in provision for our communities that councils will not be able to fill.”

Councils warned that ending the HSF would risk more households falling into financial crisis, destitution and homelessness, increasing pressure on already overstretched public services such as the NHS, social care and temporary accommodation.

Ruth Welford, assistant director for children’s charity Barnardo’s, told the BBC that ending the scheme would be “catastrophic”.

“It’s critical that it continues,” she said.

“Otherwise thousands of children will be plunged even deeper into poverty. It will be catastrophic.”

Pete Marland, chairman of the LGA’s Resources Board, said: “The Household Support Fund has provided a vital lifeline for our most vulnerable residents during the rising cost of living, as our cross-party letter highlights.

“Many at-risk households continue to face considerable challenges in meeting essential living costs, with demand for support greater than when the fund was first introduced.”

He continued: “Ultimately, councils want to shift from providing crisis support to investing in preventative services which improve people’s financial resilience and life chances, alongside a sufficiently resourced national safety net.

“However, without an urgent extension of this funding for at least a year, there is a risk of more households falling into financial crisis, homelessness and poverty.

“We are hopeful that Government will work with councils on this issue.”

In the February letter from parliamentarians, MPs and Lords said: “Keeping the HSF will help to offset the cost-of-living crisis that still so many families are facing.

“It is simultaneously the right thing to do and the fiscally prudent choice.

“We believe that removing the HSF will push more people into poverty and destitution at this time and worsen their health and their children’s.”

It followed a report from the Joseph Rowntree Foundation in January that found more than a fifth of Britons were living in poverty, with dramatic increases in deep poverty and destitution since 2017.

The Chancellor will deliver his Budget on Wednesday.

A Department for Work and Pensions spokesperson said: “We have invested over £2 billion in the Household Support Fund over the last few years – with almost £800 million already paid to families with children to help with the cost of living.

“The current Fund is available up until March 2024 as part of wider cost of living support worth on average £3,700 per household, including raising benefits by 6.7% from April and increasing the Local Housing Allowance.”