Funding for councils will top �4bn per year by 2011, says minister Councils attack 'dismal' deal Analysis: 'Tough but fair' deal

Ministers admitted funding was "tight", saying local government funding would rise by 2.3% next year and by 2.6% and 2.8% in the following two years.

Local Government Minister Brian Gibbons called it a "realistic" deal and said councils must make efficiency savings.

The Welsh Local Government Association (WLGA) warned of public services cuts, jobs losses and rising council taxes.

Dr Gibbons said local authorities would receive an additional �85m revenue support grant next year, which would rise to �296m in 2010-11.

He said: "This means that by 2010-11, non-ring fenced funding for local government will top �4bn.

LOCAL COUNCIL GRANT RISES Anglesey 1.1% Blaenau Gwent 1.8% Bridgend 3.1% Caerphilly 2.8% Cardiff 2.8% Carmarthenshire 2.8% Ceredigion 2.1% Conwy 1.1% Denbighshire 2.3% Flintshire 2.5% Gwynedd 1.9% Merthyr Tydfil 2.5% Monmouthshire 2.1% Neath Port Talbot 2.1% Newport 1.8% Pembrokeshire 2% Powys 1% Rhondda Cynon Taf 2.4% Swansea 2.3% Torfaen 2% Wrexham 2.4% Vale of Glamorgan 3.6% All Wales 2.3% Percentage local council grant settlement rises. Source: Welsh Assembly Government

"This is a realistic provisional settlement for local government in what is a tight three-year budget.

"The settlement builds on the substantial growth in assembly government support for local government of recent years."

He said it had allowed councils to "deliver three successive years" of the lowest council tax increases in Wales.

He said specific grants would also contribute to the cost of services such as foundation phase education - a new play-based curriculum for three-to-seven-year-olds - free bus travel and waste management.

Dr Gibbons added that local councillors were best placed to plan councils' budgets according to local needs and called on them to "strike a fair balance between local taxation and local expenditure".

However, the WLGA, which represents council leaders, called this year's settlement "appalling" and warned it could lead to school closures, cuts in services and sharp increases in council tax.

Derek Vaughan, leader of the WLGA, said: "The assembly government seems to think that council tax payers are the solution to their budgetary problems - they can't balance the books, so the people of Wales are expected to cough up."

Glenys Rolsten, manager of the Care and Repair agency in Wrexham, which helps to improve the housing and living conditions of older and disabled people, said her service could not do without council funding.

"We would struggle, we would pare down our service an awful lot and we probably wouldn't have the handy person service locally, or at least it wouldn't be free of charge to the public," she said.