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Kicked out of home after a family breakdown and years of physical abuse, Tracy, 17, hoped life would get better when she went to her local authority to be rehoused. It didn't. Living alone in a series of bed and breakfasts for four months while her homelessness application was reviewed, she was robbed and sexually assaulted.

Tracy (not her real name) was finally moved to supported accommodation earlier this year but is still traumatised and doesn't want to talk about the incident, so her solicitor Roselle Potts speaks on her behalf.

"At 16 to be taken off the streets and put in a bed and breakfast is really traumatic," says Potts, who works for youth advice agency Streetwise. "At the very moment they are most vulnerable they often get put in bed and breakfast with no support. Bed and breakfast is not good for anyone."

Tracy's story is by no means unique. Since 31 July 2002, when the duty to house 16 to 17 year olds came in with the Homelessness Act, many councils have seen an increase in the numbers they are accepting as homeless.

According to the Office of the Deputy Prime Minister's latest homelessness statistics, released on 17 June, the number of young people accepted as homeless in England hit its highest ever level in 2002/03 – 7970 people. The irony is that under the same Homelessness Act, councils must move families with children out of bed and breakfast by next March (except for six weeks in an emergency). There is no such target for lone 16-to-17-year-olds, who are filling the B&Bs vacated by families. The homelessness directorate gave councils with the highest bed and breakfast use £25m in June 2002 to help them get families out of bed and breakfast but teenagers share a £10m pot with the other groups who became a priority for housing in 2002: people vulnerable due to domestic violence or leaving institutions such as the armed forces (see box, far right).

The ODPM does not publish figures for the number of teenagers in B&Bs – perhaps a reflection that it is not a top priority. An ODPM spokeswoman says: "If Centrepoint and local authorities are recognising this as a problem, they should contact the homelessness directorate and we will look at the situation more closely." She adds that May's consultation on better standards for B&Bs proposed that an advice worker should visit the hotels to help residents get access to health, education and social services.

Before the 2002 act, teenagers were only housed if they were deemed vulnerable – suffering from abuse or a mental health problem. In many authorities social services handled their cases and, as one housing officer said, they housed the few who were at risk of abuse and sent the majority home. Other more proactive authorities housed more teenagers than they were required to for several years before the act was introduced. But many of these councils still have to put teenagers in bed and breakfast because they don't have enough supported accommodation.

Although the new act is undoubtedly an improvement on its 1996 predecessor, many homelessness charities and councils say it is failing teenagers.

Young people can have a right to housing under the act, but it’s not meaningful if they get put in a B&B. The act should be a route to a secure future but it isn’t because the resources aren’t there 

Rebecca Prichard, Centrepoint

"Young people can have a right to housing under the act, but it's not meaningful if they get put in a bed and breakfast which will make them even more vulnerable," says Rebecca Prichard, director of services at youth homelessness charity Centrepoint. "The act should be a route to a secure future for these people but it isn't because the resources aren't there to deliver it."

Councils and charities are demanding more mediation to get teenagers home if it is safe, and accommodation with support – which will stop teenagers becoming victims or perpetrators of crime – for those who cannot go home. However, many councils are short of both supported accommodation and mediation services, and pressures on funding make it hard for them to provide more.

York council's youth homelessness provision has suffered a double funding squeeze due to the way homelessness directorate funding was allocated and the rationing of Supporting People funds, which pay for supported housing. Like other councils, York got homelessness directorate funds to help it accommodate the new groups it had to house under the act. However, the amount each council got was based on its population. This proved a major problem for York, which has a relatively small number of residents but a disproportionately large number of homeless people. It only received £18,000 to house all the new groups. As Lesley Healey, the council's group manager for access and support, says: "York is a regional centre for homelessness. Our demand and supply is a joke, but we did not get the amounts of money we needed."

The supported housing funding regime didn't help much either: "We have one unit taking five chaotic young people, which is funded through Supporting People. It got £60,000 less than was needed for it to open but we have found savings elsewhere and got the shortfall down to £30,000 and the people providing it decided to open anyway," says Healey. With no extra money available for future schemes through Supporting People, the council cannot open the schemes it wants, says Healey.

The council also has a general homeless hostel and a unit for young people who cannot live with their families, but neither is specifically for homeless teenagers.

York started a joint mediation and support service with the social services department. The scheme helped to prevent teenagers leaving home but the council was still left with 43 homeless young people to house last year, most of whom passed through bed and breakfast at some point because there is not enough suitable accommodation.

The council says it needs 100 units of floating support, costing £5000 per place per year, plus 25 places in intensive support units costing £25,000 per person per year, which would accommodate new referrals plus teenagers who still needed support. But there is no extra cash for these services.

Parents cannot throw their children out and expect us to pick them up. The big issue is supply of suitable accommodation. Until that changes, we have to prevent homelessness 

Jim Barber, Bromley Council

The situation is similar in Scarborough. Steve Oldridge, the council's director of environmental health and housing, says: "In all our cases we're having to resort to temporary B&B. We haven't any specialist accommodation. We have a homeless hostel but that's not specialist young people's accommodation."

In south London, Bromley council is hoping a new family mediation and home advice service will make a dent in its B&B problem. The borough has 40 homeless

16-to-17-year-olds on its books, with 35 in unsupported temporary accommodation and just five in supported housing. It deals with two or three new applications a week. "Most are parental exclusions coming with a letter from Mum saying they can't stay at home and our only option is to put them in unsuitable bed and breakfasts. We want to say parents have responsibility for their children and cannot just throw them out and expect us to pick them up," says principal housing officer Jim Barber.

Under the new model, Bromley will require parents to give them 28 days' notice before throwing their children out of home. The council is teaming up with Relate and other voluntary organisations to offer mediation to families in an effort to get them to take their children back. When mediation fails, the teenagers can move into temporary accommodation – Bromley is taking on three officers, paid for through Supporting People, to support them. "The big issue for us is supply of suitable accommodation," says Barber. "Until that changes, we have to prevent homelessness in the first place."

In west London, Harrow council, which has been operating a similar mediation and support-at-home system, has found it has helped to cut its B&B population. Three-quarters of applicants who go for mediation return home having resolved their difficulties or made alternative arrangements. The rest were accepted as homeless by the council and go into temporary accommodation. The council currently has six households – not just teenagers – in B&B. "Soon nobody will be in bed and breakfast and we want to keep it that way," says a spokesman for the council. The secret to making it work, he says, is to make maximum use of voluntary groups. Harrow plans to buy services from Centrepoint for teenagers who cannot fit into the council's hostel or who require greater support then the hostel can provide.

Although the situation for homeless teenagers is improving in places like Harrow, other councils are finding less orthodox ways of keeping young people out of council accommodation. Roselle Potts says some councils are deeming teenagers intentionally homeless if they are thrown out of home. "This is just starting to happen and we will see more of it," she says. "Sixteen year olds often behave badly but parents put up with it, knowing it's a phase. Should they be treated as having adult levels of responsibility? I expect this will be tested in the courts."