Up to 10 jobs could be lost under a rescue package which has saved the Scrine Foundation for the homeless from closure.

The charity was under threat because of a dispute over housing benefits payments to its clients.

The row has also dashed hopes of a separate project to rebuild the Scrine’s night shelter, Palmer House in Station Road East.

The Department for Communities and Local Government is said to have withdrawn the offer of a £2.3million grant for the redevelopment because of the funding problems.

New funding arrangements negotiated with the city council mean the charity has had to make annual savings totalling nearly £300,000 and up to 10 jobs could be lost.

The row was originally sparked by a decision by the city council’s benefits department to cut housing benefit payments to the charity’s clients.

The new agreement has been developed using another element of the housing benefit legislation covering homelessness.

Chairman of the trustees of the Scrine Foundation, James Walker, said: “We have had to make significant savings and unfortunately that will mean the loss of up to 10 jobs and well as some reduction in what we can offer.

“Sadly, a casualty of all this is the loss of the funding for the building project which would have transformed our night shelter into a brand new facility from what is actually an old warehouse.”

•For full story see this week’s Kentish Gazette.