Croydon Council has launched a temporary £100,000 Big Society Fund in response to fears that the increasing commissioning of services from charities disadvantages small local community groups.

The new grant fund will last two years and be available to charities who have an annual turnover of less than £30,000 and employ no more than two full-time staff. Charities can apply for up to £5,000 per annum over the two-year period.

Cabinet member for communities, Councillor Vidhi Mohan said: "More than ever in such difficult financial times where the council's own funding has fallen considerably, it is vital to ensure the means of helping fresh community ideas get off the ground. We have earmarked this money for projects that help communities help themselves but that need funding to make them happen."

Croydon Council attracted strong criticism last year when it slashed its voluntary budget by £1.2m. It was forced to create a £350,000 transition fund in response.

Fellow south London borough Wandsworth has also created a £169,000 Big Society Fund for local and small community groups.

Wandsworth Council has raised the cash by clawing back funds they used to give to the London Borough Grants Scheme (LBGS), which helps a range of voluntary groups across the capital.

At the start of the year Wandsworth slashed its voluntary sector budget by £250,000.