Rising council tax bills have seen protests around the country
Council leaders in West Oxfordshire have decided to scrap a proposed 33% council tax rise, which would have been one of the highest in England.
Councillors agreed to cut the rise to 5% at an emergency meeting on Wednesday.
They said the increase, now £3 a year for most tax-payers instead of the proposed £20, makes the council the second lowest-charging authority.
The government has threatened to cap any council imposing rises over 5%.
Council leader Barry Norton said: "As well as loading costs on to councils, this year the government is threatening to intervene, cap councils and cause chaos by making councils issue new bills.
"I don't want this to happen and so the cabinet is recommending that we stick close to last year's low level.
"We can do this, because we have been prudent and have reserves.
"But we won't be able to do this forever."
West Oxfordshire District Council had planned to increase its part of the Oxfordshire levy from £60 to £80 for Band D properties in 2004/ 2005.
Mr Norton, met local government minister Nick Lansford last week to defend the proposal, saying West Oxfordshire had traditionally been a low spending council.
The councillor blamed the proposed rise on imposed decisions by the government which are unfunded, such as increases in recycling.
People living in West Oxfordshire must also pay council tax to Oxfordshire County Council, which proposes to raise rates by 6.25% next year.
This would take bills to £925 a year, according to BBC correspondent Nick Higham.