Care for elderly people at home is being underfunded by £513m, according to the latest estimate.
The United Kingdom Homecare Association says the findings provide evidence that the viability of state-funded homecare services is at risk.
The new figures come after the Care Quality Commission warned earlier this month that the sector was at 'tipping point' with cuts leading to more pressure on hospitals and deteriorating performance.
The UKHCA, representing home care providers who are mainly in the private and voluntary sectors under contract to local authorities, claims the funding deficit puts care for more than half a million people who are supported at home at risk.
It has renewed calls on governments in the UK to properly fund health care which it says will ease pressure on hospitals.
It calculates that the minimum price councils should be paying for home care services is £16.70 per hour, but the average being paid is at least £2 less.
Councils say they have been left with little choice given the squeeze on their finances by the government.
Local authorities have been allowed to increase council tax by 2% a year to pay for social care, but they say this is not enough to plug the shortfall in their budgets because of the wider squeeze on funding.
UKHCA’s policy director Colin Angel said: 'People who use homecare services are already experiencing the consequences of unstable care markets.
'Underfunded homecare is an urgent situation, which must not be allowed to continue.'
