Social services departments could avoid paying hefty delayed discharge fines by drawing up agreements with local NHS bodies that would limit the number of referrals from hospitals.

A Department of Health official confirmed that a "good" local agreement "should considerably reduce the charge" social services would be expected to pay for not having a community package available in time for a discharged patient. The deal would involve the acute trust and primary care trust.

Charges would be reduced if hospital referrals to a social services department exceeded those forecast by the acute trust when drawing up the agreement.

Activity levels and the resources needed to meet them would be set by social services and NHS organisations as part of the local capacity planning process.

Agreements should also take into account local escalation plans, which kick in when there is extreme pressure on beds, such as in a flu epidemic. Again, it is likely that in such circumstances social services would pay reduced fines.

From October, social services departments will be fined £100 a day (£120 in London and the South East) for not having a care package available within three days of notification from a hospital that a client is to be discharged.

The system will run in shadow form for three months before money starts to change hands on 1 January 2004.

Glenys Jones, chairperson of the Association of Directors of Social Services, urged social services departments to set up local agreements. She said it was a chance to "give us somewhere to go other than overspend or delay".

She said social services should talk to PCTs, strategic health authorities and hospital trusts to establish peaks and troughs in demand throughout the year, with the bill for fines potentially being picked up by PCTs in some circumstances.

"If we don’t have that agreement, local authorities take all the risk," Jones said. "By doing this, we’re agreeing to share the risk."

The DoH official said agreements would also enable social services departments to challenge plans by hospitals to increase their activity levels if these exceeded the resources they had available. Agreements could also establish where money generated from fines should be invested.