Burnley Council will have to identify a further £500,000 worth of savings in the next three years after the latest local government finance settlement announcement.
Council leader Mark Townsend has accused the Government of "deceiving" the council as it prepares to slash the amount of money offered under the New Homes Bonus scheme.
The unexpected shortfall means that the latest cumulative budget gap for Burnley Council is now greater than projected, rising from an estimated £4 million to £4.5 million.
While it has no major impact on plans for the 2017/18 budget currently being set, it does add to the challenges the council faces in the following two financial years.
Council leader Mark Townsend said: “Just when we thought Government funding cuts couldn’t get worse, they have. It was going to be tough enough to find £4 million of savings, out of a current budget of £15 million, over the coming three years. Now we have to find a further £500,000.
“The Government has deceived us. To provide us with some certainty going forward, we recently agreed an efficiency plan with them that guaranteed, although much reduced, a grant for the next three years.
“Now they have decided to slash the money we receive for providing new homes for residents. It disgusts me that once again it is the poorest boroughs like ours that are always hit the hardest.
“It adds to the pressure on the council to make savings and find ways of raising income, whilst at the same time providing essential services to our residents. We will continue our hard work to identify a range of means to bridge the budget gap, in ways which minimise the effect on front line services and staffing.”
The 2017/18 budget will be agreed by the full council next month.