The council was threatened with capping

The rate, agreed by the council's executive, is expected to be ratified by the full council next week, but could be capped at a lower rate by the government.

Pensioners, who led widespread protests at last year's increase of 17.9%, have spoken of their anger.

Local Government Minister Nick Raynsford has written to the council, warning that he wants to see the tax increase by what he describes as "low single figures".

Job losses

A spokesman for the Office of the Deputy Prime Minister, said: "We have said low single figures and we are serious about the caps.

"But we shall not be making any decisions until all the figures are in and we shall look at them in detail before making a decision."

This new increase is far too much Albert Venison, Pensioners Action Forum What do you think? Have your say on BBC Devon's website

A rise of 5.25% will mean increases of about �45 a year to most Band D properties, although there may be additional increases from the police and fire authorities and local district and parish councils.

The new budget of �627.8m includes cuts in social services and the environment budget and is likely to lead to about 50 job losses.

Albert Venison, leader of the Pensioners Action Forum, said: "This new increase is far too much.

"It is almost double the current rate of inflation and will absorb about half of this year's increase in pensions.

"Councillors do not live in the real world and are not able to tell the difference between essential and non-essential expenditure.

"If they were a private business they would have gone bust long ago because they need to cut costs, especially their wage bill."

We have had to endure some pain to deliver such a low rise Council leader Brian Greenslade

Pensioners across the county are expected to be standing for election to the county council next year.

The council is hung and dominated by Liberal Democrats and Conservatives.

Council leader Brian Greenslade said: "This will be among the lowest rises in the region and although that may be welcomed by some it is not without pain."

He said the budget was being cut by a figure of between �10m and �11m.

"We have had to endure some pain to deliver such a low rise," said Councillor Greenslade

Neighbouring Cornwall County Council also faces being capped after setting a council tax increase of 9% on a budget of nearly �475m next year.

It would put an extra �70.35 on the bill for a Band D property , taking it to �852 a year.

The full council will have to ratify the decision on 17 February.