Changes introduced at the start of October mean Legal Aid can no longer be used to help pay for residential family assessments, which can help troubled families to stay together.
But the changes have prompted a reduction in the use of residential assessments as councils struggle to meet the full cost of the service. Sue Pettigrew, director of London welfare charity St Michael's Fellowship, and chair of the Consortium of Residential Family Assessment Centres, said: "We have been hit heavily in the past month or so, with a huge reduction in referrals and for the first time we have two out of four houses empty.
Residential family assessments are an important way of assessing whether or not parents can care for their children. Just half of families who use our services return to the community with their children. For this to be a resource that dwindles seems to be a disservice to children and their families."
Alistair MacDonald, co-chair of the Association of Lawyers for Children, said: "This is a negative thing for children and families, and if the government is going to remove funding, it needs to have adequate resources and funding from elsewhere to ensure the good work of these centres continues."
But a spokesman for the Legal Services Commission, which enacted the change, said the new arrangement "will ensure the limited Legal Aid budget is spent on the legal needs of priority clients rather than being diverted into therapeutic services that should be paid for by other public bodies".