A pot of money allocated to regenerating some of Accrington’s more deprived areas is set to be slashed by £1.5 million.
The new coalition government has cut £50 million from the Housing Market Renewal (HMR) programme nationally, as it seeks to reduce the yawning budget deficit.
The results of a government review of the programme are expected on June 22, but Hyndburn housing chiefs have been warned to expect an 18 per cent budget cut.
The Regenerate Pennine Lancashire fund, formerly known as Elevate, has already financed the two-stage Project Phoenix housing renewal in west Accrington, and the Peel and Woodnook areas were next in line.
Hyndburn MP Graham Jones says he and fellow east Lancashire members will fight any cutbacks.
Councillor Peter Clarke, cabinet member for environmental issues, said he had some concerns.
He said: "We have done quite well with the HMR programme and it is quite a significant cut, but it won’t be confirmed until June 22. There will still be facelifts and renovations done, but what it will mean in effect is you will see that we will renovate one row of houses less.
"It’s not good news, but it's not devastating news."
Mr Jones said: "We have a draft letter that we're going to send to Eric Pickles, the Local Government and Communities Secretary of State.
"We are going to try and arrange a meeting with him in Westminster to clearly put the case that east Lancashire is a deprived area and much in need of investment.
"Firstly, we have some of the worst housing in the country and secondly this is going to hit the private sector hard.
"Cancelling contracts would be another hammer blow to construction companies. Rather than do two or three areas concurrently, the council decided to do them consecutively and so areas that haven’t yet received investment are in grave danger."