The government says homes must be secure, dry and have modern facilities
A Somerset council has lost out for the second time in its attempts to secure government money to improve housing.
A tenants' body says 80% of council housing in Sedgemoor District Council's area is below UK minimum standards.
Sedgemoor hoped to fund improvements in 2007 under a government scheme, but was told it did not qualify because its housing department was rated poor.
Now, despite rating improvements, the authority has been told cash is only available for building new homes.
After the 2007 disappointment, the authority had promised its tenants that cash to improve their homes was in the pipeline.
Chris Moseley, of Sedgemoor Tenants' Voice said: "The government must reverse their decision.
"We are not talking about a new kitchen or bathroom, we're talking about the way it's going to change people's lives.
"There have been loads of broken promises and we thought now the broken promises have now stopped. It's our own government that's broken the promises to the people.
"I'm all for new housing, we need lots of new housing, but let's look after the people in the houses we've already got."
Chris Moseley is calling for the government to reverse its decision
Bridgwater-based Sedgemoor, which manages 4,200 properties, was given a zero star rating for housing services by the Audit Commission in 2007.
Government rules meant councils needed to have at least two star ratings in order to get cash from its Decent Homes programme.
After improving its services, the authority expected to receive the cash.
Councillor Paul Herbert, of Sedgemoor District Council, said: "It's not just a devastating blow to the residents, it's a devastating blow to the authority. They've just withdrawn it."
A spokesman from the Department for Communities and Local Government said funding was deferred rather than cut.
"Since 2002, we have invested over £4bn in the Decent Homes programme, and this year we are allocating more than £900m," he added.