Spending on essential services in East Sussex could be slashed by more than £40 million in of a Government shake-up of council funding.

Conservative-controlled East Sussex County Council has warned of savage cutbacks and higher tax bills if the proposals are not changed.

Tory leaders accused ministers of operating a hidden agenda to starve big-spending authorities of cash to encourage voters to back powerful new regional assemblies.

The council is the biggest loser of any major English local authority in the shake-up, which will alter the way Government cash is distributed from next April.

Deputy leader Daphne Bagshawe said the loss could be as high as £44 million, or ten per cent of the council's budget.

She said: "East Sussex and almost every county I know are looking at absolutely horrendous budget calculations.

"The greatest loss by a million miles is the whole of the South-East. Brighton and Hove and all the rest are going to be hit for six."

County councils would disappear in regions if voters supported the new-style bodies.

Mrs Bagshawe said: "I think there is a hidden agenda to weaken the effective delivery of services through the current system."

West Sussex County Council faces losing up to £50 million, or nine per cent of its annual budget.

Brighton and Hove City Council could lose up to £15 million, or six per cent of its spending.

Council leader Ken Bodfish described claims county councils were being deliberately targeted as a "conspiracy theory gone mad".

He said Brighton and Hove and East Sussex were being penalised because costs were high and wage levels, used to calculate the new Government grant, were low.

The Office of the Deputy Prime Minister, which is consulting on the proposals, said it would consider all comments made by councils.