people left out of pocket after hundreds of pounds were accidentally taken from 1,400 bank accounts have been told they will get their money back.

Malvern Hills District Council, which was responsible for the error, says it will cover 'reasonable losses' if banks penalise people plunged into the red.

However, it says it does not yet know what the cost to the tax-payer will be. Staff have been dealing with so many calls, that the council has not been able to do a full analysis.

The authority has confirmed that two noughts were effectively added to direct debit payments.

Some of those hit are elderly or disabled residents who pay £7.93 a month for the Telecare line service - or £793 after this week's error.

One overcharged user of the service, an alarm which allows vulnerable people to stay in their own homes, said he was horrified when he looked at his statement: "Fortunately I had enough money in my account to cover it, but there will be people that didn't."

George Waugh, of Age Concern in Malvern, said: "They've got to get these things right. With the tightness of money these days, the elderly can't afford this sort of thing."

The same thing happened to businesses which pay for the council to take away waste.

Matthew Brown, landlord of the Greyhound Inn, Eldersfield, was actually called by his bank on Thursday after £2,345 was withdrawn, leaving him in the red.

He said. "It's quite embarrassing for them. They should really have caught this."

UK Barbers in Malvern was collared for £2,468 for emptying its wheelie-bin. Joint owner Antony Kent said: "I was furious when I first discovered the discrepancy."

Peter Gillett, the council's director of finance, said everything had been done to inform customers and to put things right.

He blamed a "processing error", a combination of human and computer errors, adding that staff had worked late at night and over the weekend to straighten it out.

Mr Gillett said although costs had been incurred sending out letters to people, it was a small price to pay to keep customers satisfied.

He added that since the incident, the council has reinforced its monitoring arrangements.

"We don't anticipate this ever happening again and direct debit remains the most secure, effective and appropriate way of dealing with these transactions," he said.

The excess money was due to be repaid into victims' accounts on Tuesday. Anyone who incurred bank charges or other costs is asked to contact the council.