A 1.9 per cent council tax rise in Birmingham next month will be the lowest of any major English city.
The increase, 37p a week for a Band D home, is less than Manchester, Liverpool or Leeds.
But the small rise led to a row last night, with Labour accusing Birmingham City Council's ruling Conservative-Liberal Democrat coalition of preparing hidden service cuts.
Sir Albert Bore, leader of the Labour opposition, said plans for £28 million of efficiency savings would hit front line services.
Sir Albert added the coalition could only push through such a small council tax rise because Birmingham had a generous £70 million increase in central government grants.
This was in sharp contrast to 1979-1997 when, under Conservative governments, Birmingham's grant was squeezed, Sir Albert (Lab Ladywood) claimed.
The allegations were rejected by council leader Mike Whitby, who said since taking office in June 2004 the coalition had brought fiscal discipline.
The local authority was on the road to excellence, he said.
Coun Whitby (Con Har-borne) told the annual budget-fixing meeting: "Our aim is to lead by example and deliver quality services in a controlled budget year after year in the same way that families and industry and commerce have always had to do."
He said the coalition had inherited grossly overspent budgets from 20 years of Labour rule in Birmingham and "catastrophic" housing and social services departments.
Coun Whitby set out plans to respond to Government efficiency targets by saving £168 million over the next three years, largely come through improved procurement practices and better use of property assets.
Most of the money will be reinvested into front line services.
The 2006/07 council budget will deliver an additional £38 million for social services, on top of £50 million this year.
There will also be a further £5 million for street cleaning and environmental improvements.
An alternative Labour budget, proposing a 1.9 per cent council tax rise but delivering an additional £3 million for youth and community services and £1.5 million for the cleaner and safer city initiative, was rejected.