A London borough has been accused of plotting one of the steepest council tax increases ever seen after Government cuts to funding.

Wandsworth Council is understood to be proposing raising resident bills by as much as 160 per cent.

It follows a projected 40 per cent reduction in the cash the town hall receives from central government, the highest planned borrowing levels in its history and “reserves that are forecast to run out within three years if urgent action is not taken”, the council said.

Labour accused the borough’s Tory administration of “planning Britain’s biggest ever council tax increase”.

But a Wandsworth Tory spokesman said: “The Labour Government is slashing 40 per cent of Wandsworth Council's funding, leaving us with the worst cash loss of any council in the country.

“At the same time, the last Labour administration in Wandsworth had spending plans that would have used all our reserves and bankrupted the borough within 18 months - leaving us with a staggering budget gap of £137 million.

"We are undertaking a full spending review, which will be completed in September. The Wandsworth Conservatives will do what is necessary to clear up the mess left by Labour. We will protect core services and deliver value for money for residents."

Wandsworth is traditionally a Tory flagship council but was won by Labour for the first time at the 2022 local elections.

At the most recent polls in May, the Tories secured 29 seats on the council, placing the party one short of the 30 required for a majority.

Labour has 28 councillors. But Lizzy Dobres, who represented Trinity ward for the party, quit her role shortly after the election to take up a new job that is "politically restricted".

A by-election, due to take place on August 27, could decide which party definitively runs the local authority.

Wandsworth Labour leader Simon Hogg said: “When Labour ran Wandsworth Council we had the lowest council tax in the country, the highest reserves of any neighbouring borough and no external debt.

“The new Conservative administration has brought chaos. They are extreme and divided and clearly don’t have a plan for how to run the council.

“The Conservatives are pretending the council has run out of money so they can bring in austerity policies.

“They’ve already cut domestic abuse services, scrapped the youth bus and axed new council homes for 400 local people.

“They now intend to massively increase council tax. It beggars belief that Wandsworth Conservatives are planning Britain’s biggest ever council tax increase.”

Wandsworth and Westminster currently set the lowest and second lowest council tax rates in the country, with benchmark Band D homes paying £1,020 and £1,047 respectively, including the £510 City Hall surge.

Under Labour's Fairer Funding Review Kensington and Chelsea, Hammersmith and Fulham, Wandsworth, Westminster and the City of London, as well as Windsor and Maidenhead, will see the largest cuts to funding settlements.

The six town halls will be exempt from the cap on raising council tax, set at 5 per cent, from next year, which means bills will likely need to hiked well above the national maximum to make up shortfalls.

Westminster Council has written to 200,000 residents as it plans next year’s budget in the wake of an “unprecedented” £100 million drop in central government funding over the next three years.

The town hall is asking residents what services it should cut amid warnings of 200 per cent council tax increases if nothing is done to curb spending.

Ministers have argued that the six local authorities have had “historically very low bills” and local leaders will be given “flexibility” for two years to increase them above cap.

Last year Worcestershire Council was given special permission to hike bills by 9 per cent following funding shortfalls. The year before Newham set a London record when it increased payments by 8 per cent.