The problem is particularly acute in affluent Surrey and Hampshire, where solicitors are deserting legal aid for more lucrative private work, according to Steve Orchard, the retiring chief executive of the legal services commission.

The commission grants contracts to private lawyers for them to advise, help, and represent clients who cannot pay. It has lost one in 10 firms since the contract system was introduced in January 2000.

The biggest effect is felt in family law, where the number is down 17%.

Liz Mullenger, who manages the Citizens Advice Bureau in Petersfield, a market town in Hampshire, said that two of the four firms which did family work on legal aid had stopped doing it. "So many are dropping out. They say it's such a cumbersome process, with bureaucracy and form-filling, and the amount of money they're getting for it is just not worth their while."

Family law solicitors who switch from legal aid work to handling the divorces of paying clients can more than double their hourly rates.

Ms Mullenger said: "More and more people are coming to us, because they can't get any form of help. There is a whole tranche of people whose access to legal advice, above what we are able to give them, is in great jeopardy."

At the CAB in Alton, 12 miles away, the manager, Teresa Jamieson, said: "It's got to the point now where we really only have one or two solicitors who can ever help us. If we have got a subject that is not family law, they [our clients] are having to travel quite long distances - to Aldershot, or to Basingstoke, which is fine if you have got a car, but a lot of people on benefits haven't."

Even where solicitors are willing to take on the work, the system imposes constraints. Under the "legal help" part of the scheme, not court cases, contracts cover only a fixed number of cases and some have to be turned away.

Peter Todd, of Hodge Jones & Allen, a legal aid firm in north London, cites a case of a woman whose solicitors dropped her breach of contract case just a month before the time limit to sue ran out when they discovered they had a conflict of interest and could no longer represent her. She turned to other firms but could not find another solicitor in the time, nor one willing to pursue a negligence claim.

The Legal Action Group, set up to campaign for better legal services for the poor, celebrated its 30th anniversary last month. But even at the party "the consensus", said Mr Todd, "was very much that the legal aid scheme is getting to the point of crisis".

The firm's senior partner, Patrick Allen, said: "There has been more or less a freeze on [pay] rates for the last nine years, but costs keep going up. This year our rent is about to nearly double. Our indemnity [insurance] premiums have more than doubled in one year, to £150,000.

"Retaining staff is difficult. We have seen a steady drift of people leaving us to go to the private sector where they are going to find at least £10,000 a year more."

"Worrying gaps are starting to show," said Mr Orchard. "All the urban areas are pretty well covered. It's outside the urban areas that gaps are beginning to show."

His successor, Clare Dodgson, 40, is currently chief operating officer at Jobcentre Plus, which this year replaced the benefits agency and employment service. Most of her career has been spent in the NHS. But while funds are at last being pumped into the health service, no rescue is on the horizon for legal aid.

Helping brief

… Legal aid was introduced in 1950 as the second prong of the welfare state. As costs rose, eligibility was restricted to lower incomes

… In 2000 the legal aid board was replaced by the legal services commission; it gives legal advice, and help and representation through the community legal service

… Legal aid is now only available through law firms, and some not-for-profit advice centres, with contracts in the particular area of expertise

… Legal aid was abolished for personal injury cases, except clinical negligence. Personal injury cases are dealt with on "no-win, no-fee" basis

… 4,000 law firms do legal aid

… Spending on civil (non-criminal) legal aid has fallen from £848m in 1998-99 to £734m in 2001-02. Criminal legal aid spending has risen. Some 1% of cases account for 49% of legal aid spending in crown courts