Cash-strapped Brighton and Hove City Council has made big strides towards reducing its deficit - but it's still in financial crisis.

During the past month, forecast overspending has dropped by £670,000 to £3.69 million.

Chief finance officer Chris Taylor welcomed the trend but said: "Projected overspending remains at an exceptionally high level."

He said it was critical strict budgetary control was exercised and further cuts and savings made.

Mr Taylor praised savings in the environment and housing department of £422,000, mainly through not filling posts and cutting spending on homelessness.

Although the number of homeless families being cared for by the council has risen by 17 in the last month to 557, fewer are being placed in expensive emergency housing.

The council is also making more money than expected from parking charges and has managed to reduce the costs incurred on taking over the waste collection service from the private operator Sita.

Savings have also been made at the King Alfred Leisure Centre in Hove where income has increased.

But there has been a slump in the number of hirings for the spring at the Brighton Centre and attendances have dropped at the Royal Pavilion.

Liberal Democrat group leader Paul Elgood said: "I am concerned about what is happening on vacancy management. We are cutting back on staff so severely that we are having trouble meeting some of our targets.

"On homelessness, we have a legal obligation to fulfil and any savings are questionable."

The homelesssness budget is expected to be £2.4 million overspent at the end of the financial year.

But council experts forecast a reduction in the numbers having to be put in emergency housing.

Green housing spokesman Rik Child said the amount spent on temporary bed and breakfast accommodation for homeless people was too great.

He said: "We need more innovative ways of dealing with this.

"We also need to fill as many vacant homes as possible and charge full council tax on empty properties."

Steve Foster, environment and housing convenor for the union Unison, said: "We are still monitoring the effect of vacancy management.

"It could have a serious effect on service delivery and overstretch staff. It is not sustainable in the longer term."