More than 12,000 people in Brighton and Hove have vanished because of a mistake by census officials.

The blunder means thousands of people living in the city do not officially exist.

The error was revealed in a Statistics Commission report yesterday, which raised serious doubts about the accuracy of the 2001 Census.

The commission called for a partial recount of the Census after an investigation discovered large chunks of the population in some areas of the UK were missed out.

In the 2001 census, Brighton and Hove's population was just under 248,000 but a mid-year estimate in 2000 by the Office for National Statistics (ONS) put the figure at 260,000.

An ONS spokesman said: "It's quite correct to say the difference is 12,000. There are quite a lot of areas which have lost some population between the mid-year estimate and the census.

"We have reinstated some figures and now estimate Brighton and Hove to be 250,218. That is what we think is the best estimate of the population now."

The blunder is worrying for Brighton and Hove City Council because the census figures are used to calculate its Government grant to provide enough services for everyone in the city.

However, council officials said that while the mistake means the city could receive less money than it needs in the future, there would be no immediate impact on its finances.

Simon Burgess, the city's lead councillor for finance, said: "It's good news they have recognised there might be a problem.

"We have had our doubts and wanted them to look again. It does have implications for finance but not for a couple of years."

Coun Burgess said, however, the council could be in line for a larger grant if the extra 12,000 people were officially included in the Government's new financial calculations.

Schools councillor Pat Hawkes welcomed the news because she said she felt for some time within her department there had been an underestimation of figures.

She said: "We had a gut feeling we were being short changed.

"If there can be a more accurate picture, it will help us tremendously.

"I would welcome a bit more accuracy because it looks as if we have lost people when we haven't."

Councillor Brian Oxley, a member of the policy and resources committee, said: "The key thing about these figures is the way it impacts on grants.

"It's vital these figures are accurate given the way the Government has treated the council over grants.

"More people living in the city means we get more grants."

Other cities affected included Kensington and Chelsea in London, which lost more than 30,000 people; Manchester lost more than 45,000 and Middlesbrough lost 10,000.

Green councillor Keith Taylor said: "It's awfully complicated working out how much money central Government gives councils and part of it is reliant on census information.

"We are looking at cutbacks of about £18 million and an increase in council tax of 16 per cent.

"Clearly, if the census figures are not correct, we will have to look at the impact those changes might have on the money we can expect."

The interim report called for ONS, which ran the £200 million survey, to carry out a recount in 2006 in the "very hard to count" areas such as city centres with transient populations.

The Statistics Commission said ONS's techniques had "failed to cope adequately" with the areas of Britain, which were the most difficult to count.

At the launch of its initial findings in September last year, the ONS said it was difficult to account for certain groups, such as students and the elderly.