And the administration, which formally takes power at the authority's annual general meeting today, has revealed it is planning a zero increase in future years.

But the defeated Labour group believes the Lib Dems are being "reckless" by making such a promise when they do not know what income the authority will receive from other sources next year.

Council leader Coun Paul Scriven said: "Labour set the lowest increase on record of 2.5 per cent, in April, but we are aiming below that next year."

He added: "We will be working towards a zero per cent increase but it's early days and we will keep the people of Sheffield informed."

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Council officers have been instructed to justify all existing budgets, as well as any increases in spending over the coming year, as part of the Lib Dems' review of council spending.

Coun Scriven said the slim-line council tax rise would be achieved without cutting frontline services.

Cabinet member for finance and customer-focused services, Coun Simon Clement-Jones, added: "We know just how unfair and regressive council tax is.

"Therefore, we are determined to minimise its impact at a time when many local people,are already feeling the pinch from increasing energy bills and food prices."

Only about a quarter of local authority income is from council tax. Government grants are the biggest source of funding, followed by business rates - collected by local authorities but set by ministers.

Because the amount of grants being handed out from Whitehall is not usually entirely known until weeks before councils' budgets are set, Labour believes the Lib Dems are being irresponsible by announcing their position for next year now.

Group leader Coun Jan Wilson said: "It seems reckless to me to make these promises. And the Lib Dems do not know what service cuts they will have to make to set zero council tax increases in the future."

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