The Government will set aside an extra £450m to help freeze council tax bills in England.
The support for local authorities means that taxpayers living in an average Band D home in England could save up to £72 on a 5% rise in council tax.
Over the past two years the Government has provided grants of around £2bn to help freeze council tax. A council tax freeze in 2013-14 would represent a real terms cut of around 2% and a fall of 9% in real terms over the past three years.
The £450m will be made available through a new grant scheme to local authorities who decide to freeze or reduce their council tax next year. If they do, councils, police and fire authorities will stand to receive £225m of funding in both financial years 2013-14 and 2014-15, equivalent to raising their 2012-13 council tax by 1%.
In addition, in 2013-14 the Government will propose to lower the local authority tax referendum threshold to 2%.
This would mean if a local authority seeks to raise its relevant basic amount of council tax by more than 2% local people would have the right to keep council tax bills down through a binding referendum veto.
The Secretary of State for Communities and Local Government will formally set out the detail on this in December.