The Government announced an initial 3.3% cut in next year's council funding on Thursday at the same time as revealing a measure to prevent a rise in council tax.
Next year's cut, which equates to a loss of £75 per household on last year's figures, will still leaves councils with enough money to maintain their services and "enough to safeguard ... taxpayers' interests," communities secretary Eric Pickles said.
The initial figure itself is "expected to be limited" to 3.3% for 2012-13 but will be subject to changes.
In a written ministerial statement, Pickles said: "Every corner of the public sector has to help pay off the deficit including local government, which accounts for a quarter of all public spending," as the Department for Communities and Local Government revealed the plan in a statement outlining council funding for the coming year.
The department has also introduced local referendums on councils which intend to raise council tax above 3.5% next year.
The measure, which the Coalition agreed to introduce when it formed last May, will enforce referendums allowing constituents to vote down any council tax rise above the 3.5% cap. Pickles called this move a "radical extension of direct democracy."