Liverpool City Council says it could shed up to 1,000 jobs to avoid a financial crisis.
The authority has to save about £120m over the next five years and said jobs cuts cannot be ruled out.
A spokesman said it hoped natural wastage and retirements would reduce job loses.
Union officials are to meet senior council officers next week to discuss the implications of the budget shortfall.
A council spokesman said: "The city council is well advanced in planning its budget for the next financial year.
"We are determined to continue delivering quality services for the people of Liverpool and are looking at a whole series of measures to reduce costs and improve value for money through better efficiency.
"Local government is facing a challenging government settlement as a result of the current economic climate and changes in the size and composition of the workforce are inevitable."
Roy Gladden, from the GMB union, said he opposed job cuts.
He said: "From the trade union side what we're saying is we now have a responsibility and a little bit of time to look at the £90-£120m and it doesn't have to equate to job losses."