How much has your council invested in Iceland? The full list

Ministers are to hold an emergency meeting with local council leaders this afternoon to discuss their demands to recover hundreds of millions of pounds invested by councils in collapsed icelandic banks.

But there was no sign that Alistair Darling, the Chancellor, is ready at the moment to extend his guarantee covering deposits from personal investors to town halls.

John Healey, the local government minister and Ian Pearson, a Treasury minister, are to meet leaders of the Local Government Association following growing concern from over 45 authorities who have put their cash into Icelandic banks.

Councillors insist that town halls followed guidance issued by Whitehall to spread their investments and try to secure a good return. Most checked with credit agencies before investing and were reassured that the Icelandic banks, including the troubled Landsbanki, had high ratings.

Kent County Council has deposited £50million in Icelandic banks and London councils have invested over £200million between them. Smaller district councils could be the worst hit as their investments, even if only a few million, is likely to be a higher proportion of their total budget.

It also emerged this morning that Transport for London and the Metropolitan Police Authority have assets in Icelandic banks which could push the total deposits up to over £1billion.

A spokesman for the Chartered Institute for Public Finance and Accountancy said the cash invested would have been from pension funds, reserves and council tax returns. “If the government says the money is not recoverable then it is going to make a real impact. There would be cuts in services and higher council tax.”

Margaret Eaton, chairman of the LGA said larger councils were not experiencing immediate cash flow problems, but she called on the Chancellor to help smaller councils until he could reassure them that their deposits were secure.

“These would be temporary, short term measures until the Chancellor can reassure councils that their deposits are protected in the same way as personal assets,” said Mrs Eaton. “Allowing councils to defer payment of money collected from business rates would help to raise millions of pounds to help plug any short term cash flow problems.

“Prudent financial management means that councils put their money into a diverse range of banks to make sure that any risk is spread to minimise the impact of problems in the financial markets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating.”

Eric Pickles, shadow Communities Secretary said the Government was dithering in the face of a worsening problem.

“Hour by hour, it is clear that more and more councils have been exposed to the meltdown in Iceland's banks,” he said. “Councils have literally billions on deposit. If they now all panic, pull their money out in the safest option like Government bonds, there will be adverse consequences.

“The withdrawal of a huge amount of the money from the banking system will destabilise it further and harm liquidity. A lower rate of return from investments will also increase pressure on council tax bills in April,” he said.

Councils which may have lost most

Kent County: £50 million

Dorset County: £28 million

Barnet: £27.4 million

Northumberland County: £23 million

Hillingdon: £20 million

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