Councils are set to meet their efficiency targets a year ahead of schedule, according to new data.

Figures released by the Department for Communities and Local Government suggested local authorities in England were set to achieve £1.3bn of efficiency gains in 2006/07.

That follows previous savings of £760m in 2004/05 and £1.1bn in 2005/06.

The news came as Sir Michael Lyons, who is conducting a government review of council finances, said he was considering a range of user charges such as new environmental taxes.

"I am clear that if people want more services, want to tackle difficult problems like congestion, environmental sustainability and water quality... you can't just tackle those problems and say you don't want to pay more tax," Sir Michael told the Times newspaper.

The interview prompted shadow local government secretary Caroline Spelman to warn that such a move could lead to increased fly-tipping.

"Given Labour's track record and the way in which hard-working families and pensioners are struggling with the present level of council tax, I -  like many people - would be very concerned about any additional tax-raising measures," she added.

Meanwhile, local government minister Phil Woolas said councils were delivering "significant" efficiency gains.

"This is good news, and demonstrates the positive approach taken to efficiency - these savings could be used to improve front-line services for communities or to keep down council tax increases," he said.

"But there is still work to do, and I expect local authorities to maintain their momentum and continue to strive for greater efficiency."