Dr Brian Gibbons said they had listened to councils

Local Government Minister Dr Brian Gibbons warned he would place limits on increases above that level.

He said extra money given to councils meant there was no excuse for exceptional hikes.

But local government leaders said the minister was giving "little room for manoeuvre" and his sums did not add up.

Speaking at the Senedd on Tuesday, Dr Gibbons said: "If I think any authority is proposing to budget excessively, I will consider using my capping powers but I sincerely hope that this won't be necessary."

The assembly government had put a "floor" in place - a 2% minimum rise in its grants to local authorities next year - and in return it expected council tax increases to be "reasonable", he said.

Asked what would constitute "reasonable", he explained: "It wouldn't want to be much in excess of 5%."

'Cut services'

Cllr Derek Vaughan, Welsh Local Government Association (WLGA) leader said: "We have always said that councils will seek to protect council taxpayers as best they can in response to the real terms cut in funding.

"Whilst many councils would have tried to keep increases to below 5% anyway, the minister is giving little room for manoeuvre and with this threat of capping his sums don't add up."

Because council services are funded through council tax and assembly government grants and the latter had been "cut in real terms", said Cllr Vaughan, the only options were to increase council tax or cut services.

He added: "The assembly government has shunted its problems onto local councils.

"It says councils need to make savings through efficiencies, but we're already exceeding their efficiency targets.