Long-struggling councils will see spending power cut by 1.7 per cent next year, leading some MPs to accuse Communities Secretary Eric Pickles of treating them with "contempt".
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Mr Pickles announced details of council funding cuts for the coming financial year in parliament while both Labour and Conservative MPs argued local services in poorest areas have been hit hardest by spending cuts.
England's worst-off councils in England will see funding cut by an average of just under 3 per cent and the richest councils face average funding cuts of 8.7 per cent for 2013-14.
There was no single national figure for funding cuts provided, but measures mean council spending power overall would be 1.7 per cent lower. Spending power includes the core "formula grant" councils get from central government and other income from council tax or grants.
"Liverpool is the most deprived area in the country," Louise Ellman, Labour/Co-operative MP for Liverpool Riverside said, asking the minister why he felt the need to treat Liverpool with "contempt".
"The cuts announced today are an added blow," Ms Ellman said, citing figures showing Liverpool has already suffered cuts of £252 per head.
Mr Pickles dismissed her argument, however, telling parliament that cutbacks in Liverpool per household were £2,836, so the council fared no worse than others: "It has a cut that is on the average."
The Whitechapel Centre in Liverpool provides accommodation, food and education services for the homeless, writes reporter Ciaran Jenkins. It relies on the council for 75 per cent of its funding. In 2011 it was dealt a £170,000 cut. Liverpool council must make £32m in savings in the coming financial year on top of the £50m made last year.
Dave Carter, chief executive of the Whitechapel centre, was bracing for further funding cuts leading to a direct loss of service: "That means homeless people in Liverpool being denied help and support they have come to rely upon."
"This centre is a lifeline," said Joe Gaskell [pictured above right], who has been homeless for 18 months. "It has saved me from the streets. It would be devastating if they cut this service.
"I couldn't go back to the streets, I'd rather be dead. We get literacy classes, alcohol awareness, even karaoke. And they do a cooked breakfast every morning for the homeless which is so important. The staff are amazing and there's always a friendly face. I couldn't do without it."
Other councils including Shropshire have already struggled under previous cuts. Shropshire sent dismissal letters to 6,500 council workers last year telling them they would be rehired only if they accepted a 5.4 per cent pay cut.
More than four in five local authorities froze council tax bills in April but many residents are still paying more because of charges leveled by other bodies. The Department for Communities and Local Government has previously made it clear that it expects councils to freeze their bills and offered them funding to do so.
Mr Pickles told the Commons councils had a moral duty to freeze council tax and that for the first time in a generation, striving councils would be able to go "full steam ahead and grab a share of wealth for their local areas, to stand tall and seize the opportunity of enterprise, growth and prosperity."
But Labour's Hilary Benn accused Mr Pickles was "living in world of his own".
"He simply does not understand the impact that his decisions on funding are having on the services and local people who use and rely upon them," Mr Benn said.
In some good news for councils, from April 2013, authorities retain half the business rates raised within their boundaries instead of transferring the money to the Treasury.
Mr Pickles also argued that "committed local authorities have protected front-line services".