Councils must sack managers and sell their buildings to make ends meet as they struggle to cope with funding cuts, Local Government Secretary John Denham has warned.

He set out his ideas for cutting costs after Birmingham announced it was axing 2,000 jobs as part of a bid to save £69 million.

And councils across Britain said they might be forced to sack almost one in ten of their workforce.

A survey by the BBC found that councils were estimating losses of 25,000 over the next three to five years out of a total combined workforce of 256,000.

Mr Denham set out ten proposals to help local authorities, including councils and health authorities, save money without damaging local services.

They included proposals to “streamline management” and share top officials between local authorities. In practice, this could mean having a single manager for services such as education working for Birmingham and Solihull Borough Council or the Black Country authorities at the same time.

Other ideas included: “Reduce the number of council buildings by locating more services together.”

Authorities were also encouraged to save money buy teaming up with neighbouring authorities to buy goods and services in bulk, and save money.

But other proposals in the Government’s 10 point plan were condemned as “meaningless jargon” by Tories.

They included: “Take a total place approach to public services.”

And another suggestion was: “Make managers leaders of innovation to improve services.”

Mr Denham claimed that following his proposals, which were drawn up with help from Steve Bullock, the Mayor of Lewisham, and Sir Richard Leese, leader of Manchester City Council, would allow councils to save money without harming services.

He said: “Councils have some tough choices in the next few years as things become tighter. But that is no reason to lower their sights on service quality people rightly value.”

He added: “Local people will rightly be intolerant if they are told that front line services will be cut because their council hasn’t done everything suggested on this checklist.”

Conservative Shadow Local Government Secretary Caroline Spelman (Con Meriden) said: “Councils across the political spectrum are suffering from falls in income due to the cold winds of Labour’s recession, compounded by fiddled funding from Whitehall which has caused council tax to double since 1997.

“Unlike Gordon Brown who has mortgaged Britain to the hilt, local authorities have to balance their books. Town halls are in the unenviable position of having to tighten their belts or increase council tax on struggling families and pensioners. This is a problem of the Labour Ministers’ own making, no matter how much they try to pass the blame.”