Council leaders have accused the Government of yet again denying them money to maintain services and keep council tax bills down.

Central Government grants to the larger Sussex councils will rise by just two per cent next year - which councillors say is not enough to cover the rising cost of providing services.

It means elected members will be under great pressure to raise taxes to fill the gap or look at trimming services.

The size of the grant increase, announced on Monday, compares badly to the 3.1 per cent funding boost the Government has shared across the country.

Brighton and Hove city councillors, at yesterday's policy and resources meeting, criticised the Government's decision to raise its annual grant settlement by just two per cent next year, which councillors say is not enough to cover the rising cost of providing services.

The city council says it has been left with a bill of more than £1 million to pay for Chancellor Gordon Brown's "pre-election giveaway" of free bus passes for elderly people.

The council had expected the £5 million cost of the scheme to be refunded by central Government but because the take-up was so high, the city's taxpayers will end up having to contribute £1.15 million.

Labour Finance Councillor Simon Burgess said: "This is definitely the toughest settlement we have had for years."

Conservative Councillor Brian Oxley described the free bus passes as a "preelection giveaway" which pensioners would end up having to help pay through their council tax. Green Party convenor Keith Taylor said: "This is a very disappointing result from a disappointing Government."

Predictions of difficult choices ahead were made by leaders in Sussex after they had digested the figures.

East Sussex will get £79.8m in 2006/7, up from £78.2m last year, while West Sussex will receive £80.2m in 2006/7, up from £78.6m last year.

Tory East Sussex County Council leader Peter Jones said: "They are still massively underfunding us, particularly as we have one of the highest concentrations of elderly people in the country."

West Sussex County Council leader Henry Smith said: "We are still looking closely at the figures but it is already clear we have had yet another very raw deal."

Eastbourne, Rother, Wealden, Arun, Chichester, Crawley, Horsham, Mid-Sussex and Worthing all received three per cent increases. Only Adur, with 7.4 per cent, and Hastings, with 6.5 per cent, and Lewes, with 5.6 per cent, received more generous settlements than the majority.