Birmingham council tax bills will rise by just 1.9 per cent in April - a 38p a week increase for the average household.
It will be the third year running that the city's ruling Conservative-Liberal Democrat coalition has been able to keep the annual rise below the rate of inflation.
The 2008-09 budget, announced last night by council leader Mike Whitby, will see an additional £32 million ploughed into frontline services, including social care for elderly people and extra help for adults with learning disabilities.
Coun Whitby (Con Harborne) claimed Birmingham had achieved the seemingly impossible by delivering real-terms cuts in council tax bills over three years while spending significantly more on essential services.
This year's weekly increase would be less than the price of a Mars bar, he said.
The strategy has been made possible by a ruthless drive to find £66 million of efficiency savings.
Money identified in the cost-cutting trawl across all departments is being used to keep council tax bills down and to boost the most important services.
"This package will be the envy of many of the major cities in the UK," Coun Whitby added.
Extra spending outlined in the budget includes:
* Five million pounds for children in care;
* Seven million pounds for waste recycling and highway maintenance;
* Five million pounds to support events promoting the city, including the Digital Birmingham project.
An extra £23 million will be put aside to help pay for Single Status, the wage shake-up which will see more than 18,000 low-paid council staff qualify for a salary increase.
Other proposals include £248 million over three years to improve council houses.
Coun Whitby said the impact of his financial policy meant that council tax bills in Birmingham were now lower than most other major cities. Annual payments for a Band D property will be £1,071 after this year's increase.
Birmingham, for the first time, is in the lower quartile of council tax bills for metropolitan authorities.
Coun Whitby added: "We are reducing the tax burden for those people on fixed incomes, the low paid and pensioners. At the same time we are enhancing service delivery.
"With a national increase in council tax bills of four per cent forecast, Birmingham has once again shown what can be done with a radical approach to service improvement and a determined approach to value for money.
"We are putting a significant amount of extra money into recycling and libraries. We are making up for years of under investment in these areas."
He spoke of a culture of change at the council since 2004, when the coalition ended 20 years of Labour rule.
"Services in a modern world have to be delivered within budget. We have introduced a requirement for every spending proposal to be subjected to true and robust analysis.
"We do not deviate from this. It is the heart that beats and the backbone running through the whole organisation.
"We have controlled the profligacy of the previous administration. Our council tax is now among the most competitive anywhere in the country."
The spending plans mean that an additional £164 million will have been invested in frontline services since 2004.
Birmingham council tax bills rose by 1.9 per cent this year and in 2006, and by 2.8 per cent in 2005, 1.5 per cent in 2004, 4.4 per cent in 2003 and 4.4 per cent in 2002.
In his budget speech to the full council later this month Coun Whitby will outline the coalition's key priorities.
They include support for vulnerable people, decent homes for all, a cleaner and greener city and building the reputation of Birmingham nationally and internationally. ..SUPL: