The Local Government Association is warning today that the downturn has resulted in the closure of independently run care homes in nearly one in seven local authority areas.
Elderly care is particularly vulnerable in a downturn because it is not a "statutory service" that must be legally provided by councils.
A survey of local authority social services staff found that almost 15 per cent of authorities have already seen closures put extra pressure on the supply of places.
More than three quarters of councils expect to feel the impact of further closures in the future.
Margaret Eaton, the association's chairman, said: "The impact of the recession is being felt up and down the country - by everyone from hard-pressed families to struggling businesses.
"Steps to help care homes stay open are among the many examples of things councils are doing to protect their residents from the downturn as much as possible.
"People who live in care homes are some of the most vulnerable in the country.
"Any warning signs that there could be problems providing places where they can be properly cared for need to be identified in good time, which councils are clearly doing."
The country's ageing population has been putting the services which care for older people under great strain.
The number of over 65s is predicted to increase by around three million to 11.4 million people by 2025.
There will also be a massive increase in over 85s, a third of whom are expected to develop dementia.