Council tax rises are the lowest in 15 years as local authorities bow to government pressure to keep household bills low.

The average tax for a Band D property will rise by £41 for the year, the Office for National Statistics said, an increase of three per cent.

Ministers have warned councils, as council tax bills for the coming year land on residents’ door mats, to keep this year’s increase below five per cent or a cap would be imposed.

Margaret Eaton, chairman of the Local Government Association (LGA), said: “Councils understand that people are feeling the effects of the recession and they’ve been working flat out to keep council tax down. This is the lowest rise for over fifteen years and works out at 79p a week, less that a loaf of bread.

“Given that town halls have made such efforts to keep council tax down this year we would not expect the government to cap any councils.”

Research from LGA shows council income is projected to fall by £2.5 billion over the next financial year, while half of councils have already cut jobs due to the recession.

Councils are also under pressure from growing demand for social services such as housing benefit and debt advice, the LGA said.

The Audit Commission criticised several councils for trusting cash with Icelandic banks this morning.

The public spending watchdog accused seven local authorities of negligence for failing to heed warnings about the banks prior to their collapse.