The pension fund for thousands of South Yorkshire's council, police and fire service staff had invested £18m in Icelandic banks, it has been announced.
The news came as the county's public transport authority said it had also put £5m into banks in Iceland.
Rotherham Council said it had deposited £3.8m in the failed Icelandic bank Landsbanki and one of its subsidiaries.
And Doncaster Council revealed it had invested £3m. Sheffield and Barnsley councils had no exposure to Iceland.
The South Yorkshire Joint Secretariat, which manages the South Yorkshire Pension Fund on behalf of the local authorities, said the fund still had a value of about £3.5bn.
Services 'unaffected'
Bill Wilkinson, clerk and treasurer at the South Yorkshire Joint Secretariat, said: "We are now waiting further guidance from the UK and Icelandic governments as to the long-term financial stability of the banks we have invested in.
"We... will be doing everything in our power to ensure this money is secure and not affected by the current climate.
"These amounts are only a small part of the funds belonging to the authorities, so there will be no impact on services."
Meanwhile, ministers have met council leaders and are promising "appropriate" help on a "case-by-case basis".
Prime Minister Gordon Brown said he was considering "further action", but the government is not offering to guarantee authorities' deposits with Icelandic banks.
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