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A £500,000 emergency fund has been set up by the government to save a number of voluntary groups that face collapse because councils have cut their funding.

The announcement of the money, by home secretary David Blunkett at a conference last week, came with a warning that it would be a one-off contribution and that councils must not shirk their responsibilities to the voluntary sector in future.

Emphasising the importance of the voluntary sector in regenerating communities, Blunkett said: "We are having to provide emergency funding to save volunteer bureaux community organisations because some councils are providing insufficient support."

He added that voluntary organisations were key to building active communities and "local authorities should look at how to do more to fund voluntary and community organisations up and down the country".

The decision to establish the fund, which will be administered by the Home Office-based active community unit, follows a submission of research to the Home Office by the National Association of Voluntary Bureaux and the National Association of Councils for Voluntary Service last month which indicated that members were facing closure because local authorities had withdrawn funding needed to meet their core costs. Money from the fund will be available in a month and NAVB and NACVS members will be expected to submit applications. The Home Office and the Department for Transport, Local Government and the Regions will jointly write to the councils involved reminding them of their responsibilities to fund the voluntary sector.

Chris Penberthy, chief executive of the NAVB, 20 of whose members will be saved by the fund, said the announcement was "fantastic and will save a lot of good organisations".

But Ann Blackmore, head of policy at the National Council for Voluntary Organisations, said although the new money was a start, government now needed to tackle the problem on a long-term basis.