A homeless charity facing a financial crisis has been thrown a lifeline.

St Patrick's Trust, of Hove, was bracing itself to lose £310,000 in annual funding from Brighton and Hove City Council.

A new deal brokered by Liberal Democrat councillor Paul Elgood could reduce this loss to £235,000.

The compromise will not be enough to secure the future of the trust's 22-bed night shelter in Cambridge Road.

The refuge has helped 300,000 homeless people get off the streets during the past 20 years.

But the council is determined to axe the shelter's £200,000 annual grant because it believes the dormitory-style accommodation provides a poor service which is unsuitable for vulnerable people. It has also failed to meet targets for helping people with a connection to the city.

The council is willing to sustain the shelter until the end of January, after which it will be dependent on fund-raising to stay open.

The new funding settlement, which will be considered by members of the council's housing committee next Thursday, would show mercy to the trust's 19 units of move-on housing, which are half-way houses between shelters and independent living.

A plan to axe a £110,000 grant for this accommodation has been dumped in favour of reducing it to £75,000.

Funding for the trust's 29-bed hostel would continue.

Coun Elgood said: "I have been in intensive discussions since the summer to try to secure a lifeline for St Patrick's and I'm very pleased a proposal has been brought forward which will, to a degree, help.

"Some will say it's not far enough but it's a much better position than we were looking at a few weeks ago. I'm hugely relieved that St Patrick's at last has a chance for a fighting future."

Amanda Lane, spokeswoman for the trust, said: "It will be absolutely fabulous when confirmation of this plan comes.

"But it does mean we will have to have the most awesome fund-raising efforts to make sure we will be able to provide what the city needs."

Mrs Lane was optimistic the shelter would stay open and said the trust would continue to lobby the council to maintain its funding for February.

She said: "It is the only self-referral shelter in the city to provide emergency overnight accommodation for homeless people."

A council spokesman said: "There are better alternatives to the night shelter that can help people break the cycle of rough sleeping.

"The council has recently taken over 28 units of accommodation for homeless people in central Brighton and will provide services which meet professional standards there."