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HM Inspector of Constabulary Zoe Billingham said the overall response to the financial challenge by police forces had been "good".
But she added: "We have found a considerable variation in the approaches taken by forces - and 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.
"We flag as a risk the potential that, as a result of these changes, there will be fewer visible police officers with a warrant card, with the power of arrest, out on our streets when they need to be.
"Neighbourhood policing is the cornerstone of the British policing model - not a 'nice to have'."
An annual value of policing report has identified five police forces that would struggle to cope with further budget cuts.
The report, conducted by Her Majesty's Inspectorate of Constabulary's (HMIC), said it was "deeply disappointed" with "missed opportunities" to drive major efficiencies in some forces.
It added others would struggle to accommodate future cutbacks - identifying forces in West Yorkshire, South Yorkshire, Northamptonshire, Lincolnshire and Bedfordshire as facing a battle to provide "high-quality service" to the public.