The devastating flooding across Britain has forced David Cameron into a partial U-turn on deep cuts in flood defence spending, with the provision of an extra £120m.

The funding will allow 50 delayed schemes to go ahead, ministers said, but hundreds of projects remain without financial support. The Guardian has also learned that cuts are forcing the Environment Agency to stop or reduce the maintenance of some schemes.

In the recent spate of flooding, nearly 1,000 homes were inundated in the south-west of England, the Midlands and Wales. Many people have only been able to return to their homes in the last couple of days to begin the clean up. More than 5,200 properties have been flooded in 2012.

"Flooding can have a devastating effect on communities," said Cameron. "So I am pleased that this additional £120m will help to fast-track defences for up to 60,000 more homes and unlock up to £1bn of economic benefits."

Half of the new funding will focus on protecting commercial and industrial areas, for example a project in Leeds to protect 250 businesses, in order to boost economic growth.

The Environment Agency's chairman, Lord Smith, said: "Recent events have reminded us forcibly of how traumatic the impact of flooding can be on people and businesses. This new funding is therefore extremely welcome."

However, the agency is losing more than 20% of its budget and 2,000 staff to government cuts and Smith warned recently: "In some cases, we are having to take the very difficult decision to reduce or stop maintenance work of our flood defence assets within the next five years." That means homes currently protected from flooding may lose that safety net in future as the defences they rely on deteriorate. The agency points out that every £1 spent on flood defences saves £8 in avoiding future damage.

The new £120m funding will be targeted at bringing forward 50 schemes, including city centre schemes in Sheffield, Exeter and Derby, and a tidal defence scheme in Ipswich. The government cut flood defence spending on entering office, dropping from £665m in 2010-11, to £540m for each year until 2014-15. The Guardian revealed in July that 294 schemes that had been in line for funding had not been built due to cuts.

Mary Creagh, Labour's shadow environment secretary, said: "This year's floods have shown how shortsighted the government was to cut investment in flood defences. Even after today's mini U-turn the government will still be spending less on flood defences next year than in 2008."

Charles Tucker, chair of the National Flood Forum, which represents 200 local groups, welcomed the new money, but said much more needed to be done. "Increasingly severe weather means there isn't anywhere now that can say we won't be flooded. The cuts are a false economy – doesn't the government ever learn that a stitch in time saves nine?"

He added: "It's cut now, suffer later."

The government's own reports acknowledge that climate change is increasing the risk of flooding. Its scientists say flooding is the greatest danger to the UK from global warming and that the damage cause could rise tenfold in coming decades.

The cuts in flood defence spending is also at the heart of the row between the government and insurers, which risks leaving 200,000 homes uninsurable if it is not resolved. A deal between the two to ensure affordable insurance ends in 2013 and was based on the government building flood defences in line with the rising risk.

The environment secretary, Owen Paterson, said: "This additional investment in flood defences, combined with the new money brought in through our successful partnership funding scheme, means over the current spending review funding will be higher than ever before on protecting people from flooding."

Partnership funding, whereby local businesses or residents help pay for defences, has raised £72m to date. But Tucker said: "It is not a sufficient replacement at all. It also enables schemes to go ahead in rich areas, while in poorer areas schemes are delayed or don't happen at all."

The budget cuts have been "worrying", said Anne McIntosh, the Conservative MP for Thirsk and chair of the Commons environment select committee, whose own constituents have suffered repeated flooding. But she added: "You will never have enough money to build all of the flood defence schemes you need. Had Labour remained in power, you would not have seen any increase in spending."

• This article was amended on November 2012. We originally stated that 3,000 Environment Agency jobs would be cut and that 7,000 properties have been flooded. The article has been changed accordingly.