Residential care for the elderly is in a state of crisis because of inadequate funding, MPs have been told.

About 1,000 people who work in the independent residential care sector travelled to Westminster yesterday.

They told MPs hundreds of homes were in danger of closing because owners could no longer meet running costs.

Three coachloads of care home owners from East Sussex travelled to London for the demonstration.

The National Care Homes Association claims its members are not paid enough by local authorities because Government cash is being diverted to other services.

A spokeswoman said: "We have a crisis in residential care but it will be an absolute catastrophe in the future if something isn't done.

"About 800 homes had to close in 1999 and the problem is getting worse every year."

Tony Andrews, of the East Sussex Residential Care Home Association, said five homes in the county had closed during February.

He said: "Unless East Sussex social services does something about increasing the payments for residential homes we aren't going to have any residential homes in East Sussex."

East Sussex County Council is increasing its payments to care homes by 2.5 per cent this year - not enough to cover costs according to owners.

The Government said funding for social services had increased by 12 per cent in real terms since 1997, but how that money was actually spent was down to individual local authorities.

A recent survey showed that on average, councils were overspending by £2 million a year on social services, with the elderly accounting for a fifth of that amount.