About 150 proposed flood defence schemes to protect thousands of Westcountry homes and businesses risk being shelved, it has been warned.

Defra and the Environment Agency announced yesterday construction would begin on 60 flood defence projects across the country to ease the "fear and worry" of residents in at-risk villages, towns and cities.

Work is to start on projects in Barnstaple and Plymouth as £7.4 million has been allocated to 22 new or ongoing schemes in Devon and Cornwall from April. But the flood prevention cash is less than the £11.8 million doled out to the two counties in 2011/12.

Under a funding model introduced last year, the Government cash is topped-up by money from councils, businesses and private investors. While this has generated an extra £1.6 million in the region, around 150 proposed schemes in the two counties will not get state support this year.

Projects in limbo include refurbishments in Exeter and Crackington Haven, North Cornwall, which was battered by flash floods at the same time as Boscastle in 2005.

Former Environment Minister Ben Bradshaw, Labour MP for Exeter, said it was a "scandal" the city has been overlooked despite officials saying improving its defences is "the top priority in the Westcountry". He said: "More than 3,500 homes and 1,000 businesses are now at risk in Exeter because of the Government's cuts in flood defence investment. Many others across the region will be delayed or won't happen at all because the local communities simply won't be able to raise the necessary funds themselves."

Funding to offset storms and rising tides has caused an ongoing row in Parliament. Defra – the Department for the Environment, Food and Rural Affairs – argues it has shielded flood spending from cuts and has committed £2.17 billion to safeguard properties by 2015.

But Labour says flood investment will be cut by £400 million and ministers are playing "Russian roulette" as homes are at risk and insurance in doubt.

The peninsula is exposed to flooding due to its long coastlines and steep valleys, underlined by brutal flash floods in Mid Cornwall, Boscastle and Ottery St Mary, East Devon, in recent years.

Flood "grant-in-aid" funding earmarked for the region is allocated by the South West Regional Flood and Coastal Committee, made up of councillors and Environment Agency officials.

This year, investment in tidal defences in Teignmouth in South Devon and Truro will safeguard hundreds of homes and businesses. But many more have missed out. Around 50 projects will have to wait until at least next year for money, including works in St Ives, Helston, Bude, Calstock and Mevagissey in Cornwall, and Plymouth, Exeter, Dartmouth and Paignton in Devon.

Close to 100 more Devon and Cornwall scheme proposals need to cut costs or attract more investment in areas including Newquay, Penzance, St Austell, Tiverton, Dawlish and Exmouth.

Officials said underwriting every scheme would be financially impossible and so-called "Partnership Funding" meant more schemes could be built than previously.

Geoff Boyd, South West regional flood risk manager for the Environment Agency, said: "This year across the South West we will continue to protect as many homes and businesses as we can."

Richard Benyon, Environment Minister, said: "The new flood defence schemes announced today will bring huge relief to tens of thousands of households."