At least five police forces will struggle to make further budget cuts that are being demanded by the coalition, the official police watchdog warned , in a sign that the government's austerity drive is reaching its limits in law enforcement.

Her Majesty's Inspectorate of Constabulary (HMIC) also voiced alarm that the British model of neighbourhood policing across England and Wales risks being seriously eroded as beat officers are switched to maintaining the frontline response to 999 emergency calls and investigating crime.

Police community support officers, who do not have the power of arrest, are now the mainstay "bobbies on the beat" and providing the only visible street presence in some areas, says HMIC.

Senior police officers weighed in to caution that neighbourhood officers have been drawn away from preventative policing to preserve frontline response services.

Steve Finnigan of the Association of Chief Police Officers (Acpo) said: "The big concern articulated by HMIC, which Acpo shares, is the sustainability of our current model of policing in the UK, which has inevitably been reduced as a result of cuts so far. Because further cuts in the future are expected, we will work really hard to transform the way we deliver policing services in this country."

The home secretary, Theresa May, responded by saying that police forces had shown an impressive ability to rise to the challenge of making savings while still cutting crime.

The startling assessment of how the 43 forces in England and Wales are coping with a 20% cut in their Whitehall funding over three years comes as official figures show a further 9% fall in the crime rate despite the loss of more than 14,000 police officer jobs since the general election.

But the official police watchdog said the Bedfordshire, Lincolnshire, West Yorkshire, South Yorkshire and Northamptonshire forces would struggle to meet a demand by May for further savings of 4.9% or £269m in 2015-16.

The HMIC report says Bedfordshire and Lincolnshire police have already made significant cuts and now have few options left. It says the South Yorkshire and West Yorkshire forces have taken the easy option of relying on short-term savings rather than "transforming their efficiency" and the Northamptonshire force will struggle to rectify significant performance issues at the same time as making further cuts.

The 43 forces in England and Wales have already had to absorb a 20% or £2.4bn reduction in their Whitehall funding since the austerity programme ordered by the coalition government came in summer 2011.

The HMIC says that halfway through the three-year spending review period there has been a good response overall from forces to the financial challenge. Most have plans in place to balance their books by March 2015 and have already made the vast majority of workforce reductions planned for the whole cuts period.

The latest figures show that 14,186 police officer jobs have so far been lost since the last general election. A total reduction of 31,600 including civilian staff in the police workforce is planned by March 2015. The HMIC report says that while forces have plans to reduce frontline officer numbers by 6,600 by March 2015, the proportion in frontline roles of those left is expected to rise from 89% to 93%.

But the watchdog also expresses concerns that neighbourhood policing teams have been asked to take on more response and investigative roles at the expense of crime prevention work. The inspectors raise concerns that fewer warranted police officers with the power of arrest will be out on the streets when they are needed: "Neighbourhood policing is the cornerstone of the British policing model – not a 'nice to have'," says HMIC.

The inspectors are concerned that some forces have missed the opportunity to lay the foundation for long-term savings, such as by collaborating with the private sector or other forces, and this may damage their effectiveness in the face of further cuts. The report says that only 18 of the 43 forces expect to deliver more than 10% of their savings this way.

Technology that is available to officers and could deliver savings also remains poor with the police frustrated by out-of-date systems and equipment.

The report says that Bedfordshire and Lincolnshire have "responded well" – they also have both been exploring collaborations with G4S – but, as small forces, they now have "limited opportunities to reduce costs further". The South Yorkshire force has not achieved "savings seen elsewhere" and the West Yorkshire police have left "large parts of their operation untouched".

HM inspector Zoe Billingham said HMIC had found considerable variation in the approaches taken by forces: "In some cases, this leaves us with concerns about how some forces will manage in the face of further cuts. We also have some concerns that neighbourhood policing risks being eroded as forces change how they deliver local policing. Finally, there are missed opportunities. The overall progress on collaboration, which is driving major efficiencies in some forces, is deeply disappointing," she said.

Tom Winsor, the chief inspector of constabulary, said it would be necessary for the police to "work smarter": "That will include greater measures of collaboration between forces and with the private sector and other parts of the public sector. It will also mean using modern technology to make the very best use of police time, keeping officers on the streets, making people safe, and not spending time in the police station using outdated technology in inefficient working practices."