Social services managers in Birmingham have been ordered to find savings after the council-run department ran up a projected £7.6 million deficit during the first three months of the financial year.

Fresh determination by the city's Conservative-Liberal Democrat coalition to contain spending came under fire yesterday amid claims that cutbacks would hit the people most in need of help.

Sir Albert Bore, leader of the council Labour opposition, criticised plans to save £500,000 from the Youth Offending Service and £6 million by cutting back on outside agency staff across the social care department.

Sir Albert (Ladywood) said: "I cannot believe we are budgeting to cut services for some of the most vulnerable people in this city."

He claimed the reduction of agency staff could result in the loss of 200 jobs - a suggestion denied by the coalition.

The social care budget has been hit by a variety of factors including a projected £4.2 million overspend on placing adults and children in residential care homes and a £2.5 million overspend on mental health services.

Difficulties in finding residential care for frail, elderly people have sparked new fears of a bed-blocking crisis at Birmingham hospitals.

At the beginning of this month 167 people were occupying beds on acute wards because places were unavailable in homes - against a target of no more than 75 delayed discharges.

Sue Anderson, cabinet member for social care and health, denied that planned savings would hit front-line services.

Coun Anderson (Lib Dem Sheldon), who has held the cabinet post for just over a year, said she inherited a budget crisis from the previous Labour administration.

She said the council was working hard to save a considerable amount of money on old people's homes by providing care in the community for elderly people.

Coun Anderson added: "We are also looking at extra care sheltered housing for people with learning difficulties so we can get away from having to find very expensive placements outside of Birmingham."

Agency staff were being urged to take full-time jobs with the council in a move that would cut the huge costs of hiring temporary employees, she said.

Mike Whitby, city council leader, pointed out that a year ago the social care budget had been heading for a £21 million overspend.

"We are doing what any company would do, identifying spending pressures and taking action to contain the budget."