A decision to buy office supplies through on-line internet auctions has resulted in savings of £1.7 million for Birmingham City Council.
Under the scheme, suppliers are invited to take part in reverse auctions, where rivals beat down each other's bids during an hour-long auction. The lowest bidder gets the contract.
The new method has been used on six occasions, in each case achieving a significant price reduction compared to previous agreements.
The council used a reverse auction to slash its expenditure on office supplies from £1.46 million to £612,500, while still maintaining the same level of service.
Coun Paul Tilsley (Lib Dem Sheldon), the deputy council leader, said: "We are delighted with the outcome of the trial auctions, they have led to significant savings being achieved without any adverse affect on the quality of service or supplies we have obtained.
"Local authorities are constantly under pressure from central government to both improve services and cut costs. The reverse auctions are a prime example of the innovative methods we are increasingly developing to satisfy these seemingly contradictory objectives."
Following the success of the pilot auctions the council has pledged to extend their use.