Ministers are set to take action against local authorities which plan to impose high council tax increases.
Raynsford has warned councils to curtail council tax increases
Local Government Minister Nick Raynsford says it "appears inevitable" he will have to use capping powers on councils that ignore his warnings.
He has written to 65 authority leaders whom he believes may have been planning to seek increases of more than 5%.
Generous government grants for 2004/5 meant there was "no justification for unreasonably large" rises, he said.
Mr Raynsford said many local authorities had written back to him "to make clear their intention to restrict increases to low single figures".
"Some have indicated that press reports about larger increases were incorrect. Others have clearly acted and brought down their own originally higher estimates. That is very welcome indeed.
"But some have not and I am therefore planning to call in some authorities - ones who have not provided satisfactory replies."
The warning came during House of Commons debate on Liberal Democrat plans to replace the council tax with a local income tax.
Mr Raynsford insisted: "We would much prefer not to use our capping powers, but it now appears inevitable that we will have to do so this year.
"There is absolutely no justification for unreasonably large council tax increases, given the generous government grant increases all authorities have received this year.
"That is why we have made it quite clear that if necessary we will use our capping powers."
The public was "unhappy" about the amount of large increases over recent years.
"And we share their concern," said Mr Raynsford.
"We will not stand aside or duck the issue when councils levy year-on-year continued unsustainable increases in council tax levels."