Local authorities in England are to get a £1bn boost to help keep council tax bills down, the chancellor has said.
Many pensioners have argued the council tax is unfair
Gordon Brown's pledge is equivalent to knocking more than 5% off next year's average council tax increases and meets demands from local councils for help.
The Tories dismissed the extra cash as "papering over the cracks", while the Liberal Democrats repeated calls for the government to scrap council tax.
It follows widespread protests about council tax rises of 5.9% last year.
'Win, win scenario'
The cash is made up of £512m reassigned from central government budgets, £125m in extra resources and £300m in reduced ring-fenced spending, Mr Brown said as he delivered his pre-Budget report.
The total support for English councils from government grants and business rates will be £60bn in 2005-6, local government minister Nick Raynsford said in a separate local government finance statement.
This is £3.5bn or 6.2% up on 2004-5, and the eighth successive
above-inflation rise, Mr Raynsford said.
Minimum increases for 2005-6 will be 4% for all councils with education and social service responsibilities, 2.5% for shire district
councils and fire authorities and 3.75% for police authorities.
It demonstrated the government's commitment to council tax payers, Mr Raynsford said.
There was now "no excuse for authorities to set excessive increases in council tax", Mr Raynsford said.
And those that did set unacceptably high council tax rates would be capped, he said, adding: "We expect substantially lower increases next year."
Councils were, like all government departments, expected to make efficiency savings, he said adding that some £6.45bn in efficiencies were expected next year.
But he added that this was "a win, win scenario" as efficiency gains would be retained locally and re-invested into frontline services.
Additionally, all local education authorities would be expected to "passport" money ear-marked for schools in full.
He also pledged that where central government set extra demands on local authorities, they would be provided with the funds to carry them out.
The Government is more than doubling its contribution to councils' civil
protection activities from 2005-6 to improve responses to emergencies including
For the Tories Eric Pickles dismissed the settlement as "nothing more than a poor attempt to paper over the cracks of a crumbling council tax policy".
Liberal Democrat local government spokesman Ed Davey said the increased cash was being taken from services elsewhere and urged the government to "act for the long-term and scrap council tax."