Council tax bills in England are set to increase by 3.5 per cent this April according to a survey by the Local Government Association.

A survey of 127 authorities suggests the average increase will be well within the Government's 5 per cent limit but above the current inflation rate of 3.0 per cent. If the trend in the survey continues it would be the second lowest rise since the council tax was introduced, adding just under £44 to the average band D bill of £1,268.

However, the Association warned homeowners that many councils were struggling to meet increasing costs, particularly in care for the elderly. It suggests that as many as 370,000 older people could see their state-funded care axed unless more money was given to town halls to pay for it.

The Association’s chair, Lord Bruce-Lockhart, accused Gordon Brown, the Chancellor of the Exchequer, of failing to provide the funds to cope with an ageing population.

He said: “It is a tribute to the determination of councils across the country that they are doing everything they can to deliver an ever better deal for the taxpayer and keep the rises down to a real terms freeze, while doing the best they can to improve services for local residents.

“However, for services apart from schools and other specific grant-funded government priorities, government funding has increased by just 14 per cent in real terms.”

Almost seven out of ten councils contacted in a previous LGA survey had said they could only now afford to provide help to those with the most serious needs.

Local government minister Phil Woolas said he was certain the low average rises so far were the result of government investment in local authorities.

He said: “It is encouraging to note that, as reported by the LGA, local authorities are driving down council tax rises without sacrificing improvements to public services.”

He added that the government would not hesitate to use powers to cap any authorities which propose “excessive” increases.