Mental health problems are on the rise as more people struggle to deal with the effects of the economic crisis, a new survey reveals.

As the downturn deepens growing numbers are turning to government run services for mental health advice, according to a coalition of local authority representatives.

“At this time of repossessions and redundancies, even more people need the vital support that only councils can provide”, said councillor Margaret Eaton, chairman of the LGA.

The increase coincides with rises in demand for finance related services; nine out of ten councils have either witnessed or expect a rise in people applying for housing benefit and debt advice, demand for free school meals is up in two out of five council areas, and businesses are asking for support in three quarters of council areas.

Mental health charity Mind has also reported higher numbers of appeals on issues specifically relating to money worries from people who do not have a diagnosis but are extremely distressed by their financial situation.

“The problem with debt and feelings of depression is that it can be self-perpetuating. The more depressed you are, the harder it is to get the motivation to stay on top of your bills, and the easier it is to slide further into debt,” Paul Farmer, chief executive of Mind, told politics.co.uk.

The charity calls for more joining up of services to break the debt-depression cycle.

“One of the issues here is that there is no specific ‘debt counselling service’ in existence – therapists aren’t trained to deal with financial concerns, and debt management services aren’t designed to deal with the emotional fallout of money worries.”

Yesterday the Local Government Association (LGA), – which conducted the survey along with the Improvement and Development Agency (IdeA) and the Society of Local Authority Chief Executives and Senior Mangers (Solace) – announced ten ways town halls could help people save up to £2,000 a year to them through difficult financial times, including making sure people take up all the financial help they are entitled to.

“Town halls are taking decisive action to protect local people and businesses from the worst effects of the recession. They are helping to keep people in their own homes, offering support to the unemployed and helping small companies stay afloat”, said Ms Eaton.

She encourages people to contact their local councils to find out what support is on offer.

Almost half of the local authorities questioned in the LGA survey say they will give financial assistance and make services more accessible to help those worse hit by the recession.