The owner of 206 dogs found living in pitiful conditions in a shed was last checked up on by the authorities eight years ago, it has been revealed.

Elizabeth Stevens was issued a breeder's licence by Mid Sussex District Council, but it expired in 1998.

On July 14 of that year she was asked to reduce the number of dogs she had but no further action was taken.

The "appalling" treatment of the dogs only came to light following 73-year-old Mrs Stevens' death.

Animal rescue charities from across the South-East were called to the outhouse behind her cottage in Malthouse Lane, Hurstpierpoint, on Sunday.

Neighbours spoke of their shock that the dogs, the vast majority of which were Yorkshire Terriers, had been found in a property so close to their homes.

The council denied it had failed in its duty.

The dogs, including at least 20 pups, lived in a 40ft shed with no windows.

They were crammed into tiny boxes and caked in their own excrement and urine. Their boxes were stuffed with urine-sodden newspapers leaving the dogs no legroom.

Six puppies were already dead when discovered by rescuers. There were also 39 cats found living in marginally-better conditions at the property.

Animal charities branded the cramped conditions "appalling" and the "worst ever seen".

Colette Marshall, of the Kit Wilson Trust, which together with the Ceila Hammond Animal Trust and the Croydon Animal Samaritans has rescued 194 dogs, said the law failed to protect vulnerable animals.

She said: "This is where there's a loophole because it's not policed.

"If the licence expires and they're not going to breed anymore, who is actually checking?

"It's a grey area and those dogs are living in that grey area."

Celia Hammond said: "If the lady had been alive she would almost certainly have been prosecuted.

"For people who keep and breed animals in conditions like that, of course they should be prosecuted and banned for life from keeping animals."

RSPCA spokeswoman Klare Kennett said the maximum penalties magistrates could impose for animal cruelty were six months in prison, a £20,000 fine and a lifetime ban from keeping animals.

Offers to give a dog a home have flooded in from as far away as America and Canada after The Argus reported the find.

Neighbours spoke of their shock. Jay Burt, 70, of Malthouse Lane, said: "I don't like to think of any animal being kept in a cage. It's shocking to think this was happening so close."

Doug Griffiths, 35, said: "It's disgusting. I didn't know dogs were being bred there but she kept herself to herself."

Council spokesman Martin Faulconbridge confirmed no checks had been made on Mrs Stevens since 1998.

He said this was because they had received no evidence she was breeding dogs for commercial gain.

Mr Faulconbridge said: "A licence is required if an establishment is used for breeding dogs for commercial gain.

"Officers had monitored Elizabeth Stevens' situation and were satisfied that Mrs Stevens did not fall into this category and therefore did not require a licence."

He added: "We couldn't knock on her door at random and raid her house. There needs to be reason to investigate her premises."