A council is facing £100 million of cuts after its tenants voted emphatically against plans to sell off their homes.

Almost 80 per cent of council tenants have said "no" to transferring Brighton and Hove's 13,000 social homes to a housing association.

After the announcement of the landslide ballot result yesterday, council leader Simon Burgess said difficult times lay ahead. Less than half of the city's housing stock meets the Government's Decent Homes standard.

The council is expected to bring all properties up to scratch by 2010 and had pinned its hopes on a £195 million cash injection from Brighton and Hove City Housing, the housing association. But the proposal is now in tatters after 77 per cent of tenants voted against the move, leaving council officers to pore over the budget to find savings.

More than 60 per cent of council tenants turned out for the vote.

The £100 million shortfall can only be funded through the housing department so cuts will focus on staffing and money for projects.

Last night, Councillor Burgess said he was willing to risk the wrath of the Government by not meeting the Decent Homes standard in time, to avoid redundancies and cuts to frontline services.

He said: "Our solution may involve pushing the parameters beyond what the Government thinks acceptable.

"I will risk the anger of the Government above not sticking up for tenants and staff. I will be more visible in my determination to press the Government for direct funding.

"We will work to find big savings. That will have an impact on staff. It will have an impact on tenants' participation and it will have an impact on money we have to fund local projects. It is going to be very tough."

Tenants could be consulted on essential improvements to their homes so the council can then prioritise work, Coun Burgess added.

Brighton and Hove's Conservative group backed the housing association option but felt the referendum should have been delayed until a "plan B" was devised.

Tory housing spokeswoman Mary Mears said she was amazed the council had not prepared for a no vote.

She said: "Given that everybody in the city was predicting a no vote, you'd think the administration would have listened but they went ahead anyway. Now the council is left with about £100 million in funding gaps." Opponents were jubilant yesterday after the news was announced.

Tenant groups argued that housing associations would push up rents, management boards would be unelected and once control left the council it would never return.

The council has also been criticised for pouring £850,000 into promoting its proposals, including DVDs and glossy brochures.

John Melson, chair of the High Rise Action Group, said: "We welcome the outcome of the vote and pay tribute to the tireless campaigning by under-resourced groups against the proposed transfer."

Green Party housing spokesman Bill Randall is calling for the council to join the Association of Retained Council Housing, a group of councils pushing for more direct Government investment in council housing.

He said: "The proposed transfer was part of a wider New Labour plan to get council housing off the Government's books and was never asked for by tenants in the first place.

"The Green Party will continue to lobby for a fair deal for the city's council tenants, which should include an immediate reorganisation of the housing management service.

"Furthermore, we urge the Government to make money available to the council to carry out the repairs and improvements needed."

Lib Dem group leader Councillor David Watkins said: "We are pleased this is the right decision for the city and the tenants. They have voted to remain with the council and we believe this was the best option."

A spokesman for Brighton, Hove and Portslade Defend Council Housing called on the council to drop its proposed cuts.

He said: "We are exhilarated but not surprised by the show of strength Brighton and Hove council tenants have made in rejecting the council's plans to privatise our homes.

"We call upon the council to join us in actively campaigning for the Fourth Option' of direct investment in council housing using the ringfenced monies generated from our rents and right-to-buy receipts."

Options available to the council

1) Severe cuts and savings are made in the housing department to tune of £100 million. The money is reinvested in improving the council stock.

This may see compulsory redundancies, which could lead to strikes by union members. Cuts to services would also impact on tenants' quality of life.

2) The council takes on the Government and decides not to meet all of the Decent Homes criteria. This would involve some cuts to services and mean some repair work would be dropped or shelved.

This could lead to financial penalties from Whitehall and the wrath of unions and tenants.

3) The council sells high value empty council properties on the open market, replacing them with additional affordable housing and using cash left over to invest in decent homes.

This is unlikely to yield enough money, certainly in the short term.

4) The council tries to increase the number of right-to-buy sales through promotions and identifies land to sell.

This option will be looked at, according to Councillor Simon Burgess, but right-to-buy sales may not generate enough revenue and the council does not have a plentiful stock of spare land.

5) Individual estates or groups of estates are transferred to a housing association or are sold under a Private Finance Initiative.

Given that 77 per cent of tenants voted against the proposal, it is far from clear that a majority in favour of these schemes will be found in any estate or block. PFI has already been investigated and is not favoured by the council.

6) The council, along with other local authorities, puts pressure on the Government to review its stance on direct funding.

The Government has shown no appetite for change and is unlikely to perform a u-turn on the issue.

To see our video report on the vote, click here