Torbay Council had planned a council rise of 9.9% before the cap

The authority was ordered to reduce its spending and set its council tax increase at 8.5% by local government minister Nick Raynsford on Thursday.

The council's proposed rise of 9.9% was described as "unacceptable".

The council has 12 days to make its case against the decision to the Office of the Deputy Prime Minister.

How do we square that circle? Andrea Colborne, Torbay Council

The government accused Torbay and a handful of other local authorities, including Herefordshire and Nottingham, of setting "excessive" budgets.

Nick Raynsford is standing by his decision.

He said: "It's caused a great deal of anger and concern among many people in Torbay.

"I did warn them that there would be a considerable degree of unhappiness, in my judgement, if they were not able to make further reductions in their budget.

"I'm sorry that they've been unable to do that, and that is why we've had no option but to apply the cap."

But the deputy leader of Torbay, Andrea Colborne, said they were not taking the order lying down.

She said: "We can now go back and say again: 'We have special difficulties that face Torbay. These are the things you want us to do. This is the money you say we may not have. How do we square that circle?'."

Torbay Liberal Democrat MP Adrian Sanders is supporting the council.

He said: "I think they've got a just case.

"Torbay has the lowest council tax of the councils the government says it wishes to cap.

"It has the second lowest council tax in Devon, and the actual increase in council tax has been lower than that in Devon or in Plymouth.

"The government isn't giving the council enough grant."