Flawed government funding for vulnerable children in the South West is creating a "time bomb" according to a new report from a children's charity published today.
Action for Children say 23,426 children in the region are living in families with multiple problems and the number is expected to rise to 27,073 by 2015.
The charity's "Red Book 2012" report examines how the recession is impacting on spending decisions and blames the Government's system of "short-term, quick-fix funding".
Public spending cuts and planned welfare reform are particularly worrying the charity.
50% of managers working for the charity reported increased demand on already stretched services with an emphasis on crisis management.
Thomas McCulloch, the charity's operational director for Devon and Cornwall said the report highlighted problems that have persisted for decades.
He said: "We are sitting on a ticking time bomb that has the potential for both human and financial repercussions.
"We welcome the coalition government's commitment to early intervention but the current system of short-term, quick-fix funding is simply exacerbating existing need and instability, creating a false economy that could cost society more than £1.3 billion a year.
"As changes to welfare, unemployment and the recession look set to continue, we desperately need a shift from short-term thinking to long-term strategies that put children first and short-term politics second."
Some 21% of Action for Children managers said they have had to amend the criteria for which children, young people and families are eligible for support.
Mr McCulloch said: "We need local services that have the flexibility to deliver the early intervention that's so urgently needed in communities right now.
"Simple changes to the way the current system is funded are critical if we're to have any hope of protecting future generations of children."
The charity want the Government to introduce a statutory duty upon local authorities to provide sufficient early intervention services in their local area.
They also want a commitment to alternative and long-term funding arrangements for local children's services.
However, the Government insists it is boosting spending on vulnerable children.
Last night a spokesman for the Department for Education said: "We want children to have the best possible start in life and we are increasing spending on children and young people's services to £8.6 billion.
"Funding for early intervention will rise to £2.5 billion in 2014-15 and we are retaining a national network of Sure Start centres with 3,330 currently open in the areas where they are needed most.
"Parents of every three and four-year-old can already claim 15 hours of free early years education a week."
Alec Robertson, leader at Cornwall Council said he understood the charity's concerns. He said: "The national debt crisis the Government inherited has already resulted in unprecedented cuts. There's more belt-tightening to come.
"As our budgets shrink and with the much smaller budgets for universal services, such as libraries, leisure and environmental works, already hard pressed, our biggest spending areas, for vulnerable adults and children, will come under more pressure."