But Scarborough councillors are also being warned that while a proposed waiting list would help ease financial pressures in the medium term, it could also stoke up £1.8m of debt within 18 months.

The council has a legal duty to provide grants to pay for the adaptations that enable elderly and disabled people to live independently, such as stair lifts, ramps, and level floor showers.

Environmental health officers say not only do the works help to improve the lives of the claimants, but they are often the only way elderly and disabled people can avoid going into a care home.

The town hall gets Government funding to help pay for the scheme but says it has not kept pace with demand.

In 2007/08 for example, spending was £777,000, but the Government only contributed £253,000. Money for the work from former council house sales had also dried up.

Andy Skelton, the council's head of environmental services, says that provided the requests were deemed reasonable and practical, pleading poverty was not an option for the council.

He added: "In addition the council is unable to artificially delay the way that it processes the applications.

"To do so would be unlawful and could result in legal challenge as well as an adverse assessment from the Audit Commission, negative press, and censure from the Ombudsman."

He said £1.23m was available to pay for the work this and the next financial year but with more than 140 applications already in the pipeline the cost would be £1.47m – and the bill would continue to grow unless checked by a waiting list system.

Expenditure is predicted to outstrip resources by at least £243,000 before April 2010 and a financial strategy would be needed to balance the books in the next business year.

"In the meantime, it is important that consideration is given to adopting a prioritisation system that will at least exert some control over the speed of expenditure in future years," Mr Skelton added.

"Officers have therefore been working with officers from the county council to develop a draft prioritisation that is to be used as the starting point for consultation."

He suggests dividing cases into emergencies and non-emergencies.

Emergencies would cover people with less than six months to live, those whose lives would be at risk if their homes were not made safe, and patients who would be stuck in hospital or nursing homes unless their homes were adapted.

All the other cases would be treated as non-emergencies, but a points system would be introduced to give priority to those at risk of going into care if not provided with suitable domestic arrangements.

It is expected that in any given year the council will handle about 10 of the emergency cases and they would be fast-tracked, while it would clear the less pressing applications at an annual rate of about 70.

But Mr Skelton warned the introduction of a priority system will not reduce demand and will stoke up costs for future years.

He added: "The introduction of a prioritisation will result in the rapid development of a lengthy waiting list for grants that the council has a legal duty to provide.

"It is estimated that should the current referrals continue at the same rate the council will have in excess of 375 new applications registered by March 31 2010.

"This will represent around £1.8m in stored up cost."