Council tax bills in Brighton and Hove could rise by more than five times the inflation rate next year, despite £7 million cuts to services.

A proposed 6.7 per cent increase would mean an extra £77.84 on top of the current £1,161.84 bill for average Band D homes.

Brighton and Hove City Council officers have also been told to earmark swingeing budget cuts while trying to protect frontline services.

Councillors fear they will struggle to keep next year's rise down to Government targets and will lobby ministers for more money at this month's Labour Party conference in Brighton.

Finance councillor Simon Burgess said: "I seriously hope council tax rises will not be this high and over the next six months we'll be working hard to keep that figure down.

"We as a council fully recognise the difficulty people face with tax increases.

"But this is balanced against the fact we do have to provide essential services."

Officers have drawn up a projected budget for next year giving the first indication of tax rises.

Costs such as the amount spent on children in care could grow by £7 million.

This means that even with a council tax increase approaching seven per cent, £6.7 million would have to be cut from budgets.

At the same time, Deputy Prime Minister John Prescott has called on councils to keep tax rises to just three per cent.

But much still depends on how much the council will be handed by Chancellor Gordon Brown in his annual financial settlement.

The Government expects 2.5 per cent efficiency savings every year, amounting to £1.95 million.

Officers are now trying to find a further £3 million - or three per cent - in reductions.

Labour councillor Brian Fitch added: "We live in a city where lots of people live on a low income or pension. We cannot keep hitting them with high council tax.

"The challenge for us is to find new ways of working and spending the money we are given. We have had more money than ever before from central Government given to this council."

Coun Keith Taylor, convenor of the Green group, said the budget projections made "very sad reading."

He said: "The Government wants more services for less money. The shortfall yet again will have to be made up by above inflation increases in council tax and in 2007 we are facing a re-evaluation of properties.

"We could see an exodus of people in middle-income families away from the city because they will no longer be able to afford to live here."

Conservative councillor Brian Oxley said: "The Government could not have done more damage to this council's finances if it had set out to do so.

"If this council is going to achieve the 6.7 per cent council tax rise the Chancellor wants the reduction in the level of services are going to be enormous.

"People are going to have to make significant adjustments to their household budgets when they are forced to pay this."

For the current financial year, the council increased council tax by 7.7 per cent and made budget cuts of £8.5 million.

According to the proposed budget for next year, schools will receive a 5.5 per cent increase, compared to a national rise of seven per cent.

This includes a £750,000 cash bonus from the Government following a one-off grant of £1.5 million last year.

Much of this will be taken up in teacher pay increases and workforce reforms in primary and nursery schools.

The council is expected to overspend the budget set last year by £1.7 million.