Ministers earlier this year activated the Bellwin scheme, an emergency pot of funding to help councils following major emergencies, and was most recently drawn upon in the region in Boscastle, North Cornwall, following the devastating floods in 2004.
Devon and Cornwall have been among the areas hardest hit by heavy rainfall since the summer. Cornwall Council has already begun the process to apply for emergency hand-outs, but will have to spend almost £1.5 million on repairs before it can get a penny. Devon County Council's "threshold" is £1.7 million.
The Bellwin scheme also leaves councils having to foot the entire bill for flood-damaged roads, despite Cornwall having to find at least £2.5 million to make them good again.
In the final Commons debate before the Christmas recess, Cornwall MP Stephen Gilbert called for the Bellwin scheme to be reformed.
Mr Gilbert, Liberal Democrat MP for St Austell and Newquay, said: "Last night, we saw torrential rain across the South West cause considerable damage to businesses and homes, and disruption on many key travel routes.
"In my constituency, the villages of Par, Bugle, St Blazey, Gorran Haven and Mevagissey have been flooded again.
"Across Cornwall, other communities in Polbathic, Altarnun, St Keverne and Gunwalloe have all been hit too.
"This is not uncommon for the people of Cornwall – just four weeks ago we were hit with flooding."
The existing Bellwin scheme has a threshold that means councils pay all costs up to 0.2% of its entire budget. That equates to £1.41 million for Cornwall Council but, before the area's six district council's were scrapped in 2009, the threshold for Cornwall County Council would have been just £58,000.
Devon County Council has been left with a clean-up and repair bill of more than £8 million caused by flooding over months since July. Officials have asked Government if the incidents can be bundled up so all the costs are rolled into one when applying for Bellwin aid.
Mr Gilbert went on: "This scheme is outdated and does not seem to make any allowance for the new unitary authorities. If Cornwall still had a two-tier local authority system, that threshold would be just £58,000.
"That, coupled with tight rules limiting funding to the additional costs incurred in dealing with the immediate emergency only, basically means that the likelihood of an emergency incurring eligible expenditure greater than the threshold is now significantly less than if the two-tier were still in place. We need to modernise and update the Bellwin scheme."
Cornwall Council has notified the Government about the impact of rainfall and flooding at the end of November which flooded properties throughout Cornwall and damaged some of its transport infrastructure. Officials are currently assessing the cost of work.
In recent years, the Bellwin scheme has helped pay for damage caused by the explosion at the Buncefield fuel depot, flooding in Yorkshire and Cumbria and the riots in the summer of last year.
The now defunct North Cornwall District Council and Torbay Council and Teignbridge District pocketed Bellwin cash in 2004.
In response in the Commons, Tom Brake, the Deputy Leader of the House, said: "(Mr Gilbert) raised interesting issues about the Bellwin scheme, and I hope that the Department for Communities and Local Government will respond to his specific point about what he believes are anomalies in the way it works."
Elsewhere, Devon MPs detailed the impact of flooding in their constituencies.
Neil Parish, Conservative MP for Tiverton and Honiton, said there had been "huge problems" with flooding throughout the Axe valley, particularly in Axminster, and questioned whether flood officials had been spread too thinly.
He added: "It is perhaps not feasible in this day and age to have staff from the Environment Agency who can go around, look at the sluices and reduce the water levels, but I do not see why an honorarium cannot be paid to individuals – farmers, perhaps, or local residents – who can reduce the water levels much more quickly because they are on the spot and can deal with the problem at that moment."
Mel Stride, Tory MP for Central Devon, said Kennford and Buckfastleigh had endured "some of the worst flooding the country has seen recently". He said: "Although it was an absolute tragedy, particularly for those affected, it was also an opportunity for the community to come together, They did so magnificently."
