Sue Essex has yet to reveal how the money will be distributed

Gordon Brown made the announcement in his pre-budget report last week.

Now Welsh Finance Minister Sue Essex has confirmed that this money will be added to funding for councils.

But Welsh Liberal Democrats were accused of "jumping the gun" for claiming that three councils would miss out on the extra money.

Although Mr Brown earmarked the extra funds to soften the blow of council tax rises from rebanding, the final decision on how it would be spent was the assembly government's.

Ms Essex said: "The Assembly Government recognises the importance of local services and the need to support council tax payers particularly in the circumstances of the council tax revaluation.

"We have decided that all of the additional money available to the Assembly Government next year should be allocated to support local government and council tax payers.

"In due course I will be tabling the final local government settlement.

Welcomed by councils

"This will include details of the distribution of this �7.4 million and other additional funds which have been made available to local government."

The Welsh Local Government Association has welcomed Ms Essex's announcement.

Finance spokesperson and Torfaen councillor Bob Wellington said: "This is exactly what the WLGA has been calling for and it will help councils to keep next year's council tax levels to a minimum.

"But the WLGA is still in ongoing dialogue with the Wales Office and the Welsh Assembly Government as, whilst this additional money is welcome, it is not enough to deal with cuts in other services such as the Supporting People Programme in Wales".

However, the Welsh Liberal Democrats have claimed that three of the 22 council, Cardiff, Wrexham and Gwynedd, will not receive any extra money.

Mike German, assembly leader of the Welsh Liberal Democrats and spokesman on local government, said:

"This decision adds another twist to the sorry story of next year's council tax bills. The fair way to distribute this money would be to share it between all 22 local authorities in Wales.

"Taxpayers in Wrexham, Cardiff and Gwynedd thought they were going to get some help - but it isn't coming".

But this was denied by the Labour Cabinet, with a spokeswoman accusing the Liberal Democrats of "jumping the gun".