Croydon Council has forecast a £4.2million overspend for this year.

The figures were discussed at Monday evening's cabinet committee meeting.

The potential overspend was detailed in a financial management report, which was delivered to cabinet members by the director of finance and resources, Nathan Elvery.

The overspend represents around 1.54 per cent of the council's net budget for the year, with the largest element of the overspend falling under the social services budget.

A revised forecast in June 2006 showed the department overspending by £3.5million.

The decision to keep open Stroud Green Lodge and Coleby Court care homes, was said to be a major factor.

However, savings in the finances and resources department are due to offset the social services losses and plans to decrease the shortfall further are being drawn up.

Mr Elvery said: "It is encouraging to see other departments doing well."

The details of the plans will be reported to a meeting of the cabinet on October 9.