South Lakeland District Council said no jobs were affected, with savings met through "housekeeping efficiencies".

Earlier this year the council said there would be a budget shortfall of �1.5m by the end of 2006/07 if nothing was done to address the situation.

A spokesman said savings came from reducing car allowances and cutting back on stationery and furniture.

'Back on track'

The spokesman said councillors had acted swiftly to set up internal working groups to take a "hard look" at existing budgets and processes and challenge managers on their expenditure.

He said: "This first stage of the review has identified savings and efficiencies of �572,400 through centralising a number of budgets, cutting back budgets which have previously been under spent and challenging expenditure in some areas."

Council leader Brendan Jameson said the council had shown "determination" in tackling the deficit just two months into the financial year.

"Most of the savings are from internal budgets such as car allowances, furniture, equipment, printing and stationery," he said.

"Some external budgets are affected, but only where it will lead to getting better value for money for the taxpayer rather than a reduced service."