The government has announced that average council tax bills should not rise by more than five per cent in the next financial year.

Local government minister Nick Raynsford said "substantial investment" from the government should help to keep bills low.

But the opposition accused the government of attempting to "bribe" voters ahead of the forthcoming general election.

It was announced on Thursday that councils will receive over £60 billion under the latest local government finance settlement.

That represents an increase of 6.3 per cent on previous funding levels.

"Given this substantial investment, we expect all authorities to budget prudently and minimise demands on their council taxpayers," said Raynsford.

"We expect the average council tax increase in England to be less than five per cent in 2005/06.

"Authorities should be in no doubt that we will again use our capping powers to protect council taxpayers from excessive increases.

"Indeed, we are prepared to take even tougher action than we did in 2004/05 if that proves necessary.

"There is no excuse for excessive council tax increases - we will not tolerate these either next year or in years to come."

But shadow local government secretary Caroline Spelman said ministers were guilty of "a cynical attempt to limit council tax rises ahead of an election only to drive them up again if elected to a third term of office".

"With revaluation next year, and the plans for the introduction of new higher council tax bands, there is no doubt Labour would increase the tax take even more."

For the Liberal Democrats, Ed Davey said "pre-election bribing and bullying can't hide the fact that council tax will be rising much higher than inflation, and faster than pensions".

"What this year's figures won't show are the pressures for steep tax rises in the next parliament, not least because of council tax revaluation," he said.

"The government may crow about keeping council tax rises to five per cent, but that's double the rate of inflation and will push the average bill to more than £1,000."