The White Paper proposes shifting more power to local communities

Council tax payers in England and Wales are shouldering too much and businesses should take on more of the burden, the Local Government Association maintains.

It said free care for 370,000 elderly people could be dropped unless funding is boosted by 2009.

The government described the claims as a tactic to secure additional funding.

The LGA said there had been an "unprecedented" 50% rise in local authority spending in England and Wales since 1997, with most of the money going on education.

The cost of waste disposal is set to more than double by 2013 because of European Union landfill regulations, it added.

Councils are also facing an increase in the elderly population over the next three years, it said.

'Negative picture'

Sir Michael Lyons' review of local government funding is due to report before the end of the year. The government, meanwhile, has issued a White Paper on proposals to give English councils more powers without Whitehall approval.

"Government must be honest and decide if it is serious about meeting the demographic, social, environmental and economic costs of the future," said LGA chairman Lord Bruce-Lockhart.

"If it is, investing in local services is crucial and local government is ready to play its part. If not, local councils and local taxpayers need to know, so they can prepare for the consequences."

Local Government Minister Phil Woolas said: "If local government wants to be a partner in governance and the delivery of services with national government, they have to talk the language of balanced books and not that of a pressure group.