A service helping people with mental health problems to cope with rent arrears and the threat of eviction will not be scrapped in July by Tower Hamlets council but will be given a short-term reprieve.

The council’s Housing Link service was set to cease taking new referrals from next Monday as it formed part of the �70m worth of cuts to council services to be made over the next three years.

Scrapping it and its seven-member team, based in Whitechapel, was intended to make a saving of �312,000 for the council but at a cabinet meeting on Wednesday night, it was proposed that �60,000 be given to fund up to three posts for a year.

There was conflicting information from the council though because a spokeswoman said yesterday that the three posts would be funded “for up to six months if required”.

The motion was proposed by councillor Alibor Choudhury, the lead member for resources, to ensure a “smooth transition for users” and will be funded by “contingencies released by a lower than expected overspend in 2010/11.”

It is not clear if any new referrals will now be taken but it is believed the retained staff will be kept on to manage a handover to other council or NHS agencies.

Housing Link has built up relationships with housing associations in Tower Hamlets including Poplar HARCA, Eastend Homes and Tower Hamlets Homes and is made aware of any forthcoming evictions.

Its staff then check records to see if any potential evictees have mental health problems and contacts them if so to ensure that an arrangement is agreed with their housing association or possibly private landlord.

It helps around 170 people a year and keeps contact with individuals should they suffer further housing problems in future.

Mr Choudhury met with Phil Carlson, 44, of Globe Road, who has been helped by Housing Link and who has bipolar disorder, on Monday.

Mr Carlson gained support from the service to sort out rent arrears and access benefits after having a breakdown when he lost his job with the council last March.

He said: “The message from the councillor was that the mayor [Lutfur Rahman] is passionate about mental health but judging by the cabinet meeting, that doesn’t seem to be the case.

“I’m not sure what the mayor’s intention is and he hasn’t granted me any time to speak to him.

“They believe that other agencies will be able to do the same work, but I’d say that is absolute poppy-cock.

“If they are able to, why haven’t they been?”

A council statement released prior to the cabinet meeting said it has a number of services that will be able to help people needing long-term support including community mental health teams, a housing and homelessness advice service and a floating support service called LookAhead.

Rachael Saunders, a Labour councillor, said: “The mayor first proposed to cut it, and has now proposed a partial and temporary reprieve. “The Labour group will be looking at this very carefully as we make our own budget proposals.”

Mr Carlson plans to make a deputation to the full council meeting on February 23 at which the mayor’s budget will be voted on by councillors.