The decision has been blasted by carers and community leaders.
The Blackpool and Fylde and Wyre Clinical Commissioning Groups, have taken the decision to reallocate the funding given to the Windsor Unit at Clifton Hospital, St Annes.
They say the unit was only being used by 42 families, and will now use the money in other ways to help carers.
But the decision has been met with outrage.
Fylde Coun Liz Oades has called for the decision to be looked at by Lancashire County Council’s scrutiny committee.
She said: “I’m disgusted by this move. It’s a disgrace.
“How are people supposed to be referred for respite care – by the CCG’s clinicians. It’s like Turkeys voting for Christmas.
“I’m dealing with a woman who’s looking after her husband, lifting him all the time.
“She can take him to a centre in the day sometimes, but she needs a proper break. A rest.
“To offer her a couple of hours’ help in the day is ridiculous. To be in your 60s or 70s and lifting someone must be hard work. I would say not enough people know about this service. “It’s the same as they’ve done before – close it and consult later. We heard nothing about the proposals.”
One carer, who asked not to be identified, said: “It’s outrageous. They have decided to pull the funding from a service because it was grossly underfunded in the first place.
“Because they couldn’t provide us with the help we so desperately need across the coast, they have decided to withdraw the service in its entirety. That is no way to run healthcare.
“It’s let carers down, their families down, and those who are being cared for down.”
Dr Amanda Doyle, chief clinical officer at NHS Blackpool Clinical Commissioning Group, said: “This decision was taken following a thorough assessment during which service users and carers were invited to share their views. It is estimated that there are approximately 16,300 informal carers in Blackpool. Between January and December 2014, just 15 families from Blackpool made use of the Windsor Unit.
“We already invest in more equitable, alternative respite provision for our residents, including day care and carers grants.
“Working with Blackpool Council we will now continue to make sure that all carers have access to this.
“All carers will be offered an assessment by Blackpool Council.”
A spokesman for NHS Fylde and Wyre Clinical Commissioning Group, said: “Fylde and Wyre Clinical Commissioning Group recognises carers play an essential and central role in the provision of care and their contribution to promoting and maintaining the wellbeing of people across Fylde and Wyre is significant.
“We received a number of concerns regarding the future of the Windsor Unit and worked with partners to review the current use of the service. The decision to reallocate the funding previously received by the unit was not an easy one.
“There are more than 23,000 carers across Fylde and Wyre and between January to December 2014 only 27 Fylde and Wyre carers used the Windsor Unit.
“We invited all the carers, users and other stakeholders to share their views with us and they told us they value the service, but many recognised the use of the service was not equitable.
“We have carefully considered all the responses we received and to ensure all carers receive equitable access to respite care, have decided to reinvest the existing Windsor Unit funding in the broader range of carer support services currently commissioned by Lancashire County Council following assessment. This includes personal budgets, sitting-in service and short breaks.”