Announcing the end of compulsory competitive tendering and universal rate capping Local Government Minister Hilary Armstrong said: "We don't believe there will be excessive Council Tax rises.

"I cannot imagine councils want to behave in a massively irresponsible way. But if they do we will have to intervene."

Abolishing "crude and universal" capping is a Labour manifesto commitment but the government is to bring in new reserve powers enabling it intervene when councils spend too much.

Hilary Armstrong, making local government more accountable

The Local Government Bill will also introduce the "best value" regime under which councils will be required to set targets for public services, consult with their communities more widely in between elections, and face new external audit and inspection arrangements.

Ms Armstrong added: "This government wants councils to deliver good local services at a reasonable cost which match local people's needs. The Local Government Bill aims to achieve this as well as strengthening local financial accountability."

The changes, which affect England and Wales, will have a slightly different flavour in the principality as the new Welsh Assembly will have a part to play, alongside the Welsh secretary, for ensuring the reforms are introduced in a way that suits Welsh conditions.

The minister said she expected budget savings of about 2% a year once the proposals are in effect, and she expected councils would use this was money to re-invest in frontline public services.

On Wednesday ministers will announce the support settlement to local government which Ms Armstrong said would be "generous" reflecting the government's priorities on education and health.