Councils in England were told they will have to hold a referendum if they want to put up council tax bills, as the Government confirmed a further squeeze on local authority spending.
The Department for Communities and Local Government said councils would face an average 3.3% reduction in spending power in 2012-13 - with average spending per household falling to £2,186, a drop of £75 on last year.
At the same time Communities Secretary Eric Pickles said any local authority which rejected a Government offer to freeze the council tax and sought to impose a rise of more than 3.5% would now have to put it to voters in a referendum.
"Since 1997 people have seen their council tax more than double, pushing typical bills to £120 a month," he said.
"We are getting to grips with this with another council tax freeze deal and by radically extending direct democracy over big bill increases with a new local tax lock.
"Councils have a moral obligation to help hard-working families and pensioners with the cost of living. If they want to hike taxes on their local residents above 3.5% they'll now need to get a direct democratic mandate to do it."
Mr Pickles said the total settlement for councils in England of £27.8 billion was "fair and sustainable" enabling them to "safeguard the most vulnerable, protect taxpayers' interests and the front-line services they rely on".
"Every corner of the public sector has to help pay off the deficit including local government, which accounts for a quarter of all public spending," he said.
"New financial incentives and powers for councils will mean they are well placed to find the necessary savings without salami slicing services."
© 2011 Press Association