ONE in five homes in East Lancashire relies on 'doorstep' credit companies charging interest at rates of up to 400 per cent, debt experts revealed today.

Borrowers typically have to pay back £160 for every £100 of their loan and many find themselves "enmeshed in a vicious circle of debt" that takes over their lives.

The extent of the area's 'financial underclass' faces an estimated 90,000 people.

Today, East Lancashire MPs called for urgent action to tackle the problems caused by the rising tide of debt.

"These astronomical interest rates are being charged to the people who can least afford to pay them," said Phil Duckworth, of East Lancs Moneyline, the organisation set up in Blackburn to help vulnerable people.

"Thousands of people - many of them unemployed and single mothers - are being sucked into a cycle of debt. What these companies are doing is completely legal.

"There are large sections of the community who do not have access to a bank account because they are on benefits or have a poor credit history. When they are desperate for money they have no choice other than to go to these loan companies."

Ribble Valley MP, Conservative Nigel Evans, said:" I am shocked and appalled by these statistics."

And Hyndburn Labour MP, Greg Pope, added: "These are the most vulnerable people in society. The Government needs to act to stop firms extracting huge interest rates from vulnerable people."

"It is a mammoth problem," said Mumtaz Patel, of Blackburn's Citizen's Advice Bureau. "These home credit companies charge extortionate rates of interest on their loans, but the people taking them on are desperate.

"If your washing machine packs up and the nearest launderette is miles away, what else can you do?"

The largest loan company operating in East Lancashire is Bradford-based Provident Financial group, which last year made £206million profit from a turnover of £1.1billion.

For a typical loan of £300, people repay £480 - £15 a week for 32 weeks - at an APR of 399.7 per cent. Small loans from a bank attract an APR of 17.8 per cent.

East Lancashire Moneyline is the third organisation of its type in the UK and has already extended from its Blackburn base into Hyndburn, with moves in to Burnley and Bury expected later this year. There are hopes a service could also open in Pendle and Rossendale.

It is a not-for-profit company and over the past two years has loaned more than £1million to around 1,500 people.

A spokeswoman for Provident Financial defended its interest rates and said the company enjoyed a 93 per cent satisfaction rating from customers.

She said the company provided small, short-term, unsecured loans, with customers typically borrowing between £150 and £500 over a period of six months or a year.

"There is a fixed, all-in charge - no hidden surprises in the small print - and a weekly home-collection service arranged at a time that is convenient for the customer.

"Home credit provides customers with a simple, convenient, transparent and flexible service."