Local authority homes which look after adults with learning difficulties are to be handed over to the private sector to run.
The move by Blackpool Council will see 35 jobs axed, including 10 compulsory redundancies.
But it will save the council £750,000 this year, and around a £1m next year.
Town hall chiefs said residents and their families have been consulted throughout the changeover.
The most vulnerable adults will remain in council-run homes.
Coun Kath Rowson, cabinet member for adult social care, said: “We have personally met and spoken to each service user and explained the changes to them and their families. This council’s priority is to safeguard and protect the most vulnerable members of our society and we will support every one of them to make sure that the transition is as smooth as possible.
“The council’s in-house services will concentrate on niche provision, in line with the direction they have been taking over the past several years.
“This means the council will no longer offer an in-house Supported Living service to people who are not assessed as having complex or challenging needs.
“People whose needs do not meet the revised access criteria are being supported to select an alternative provider, which will continue to meet their individual needs and preferences.”
But union leaders today said they feared the service was being ‘crippled’ by the changes.
Julia Orry, branch secretary for Unison at Blackpool Council, said: “This is a frontline service which is being hit by budget cuts.
“The service is being crippled and I don’t think the private sector is the best way for it to run.
“Some of the staff being lost have been with the council for years, helping to look after clients in their homes.”