Unison said Derbyshire Dales District Council's move "beggars belief", while the leader of the Liberal Democrats called for a freeze on members' allowances.

But Derbyshire Dales District Council leader Lewis Rose said: "The council followed the recommendation of the Independent Remuneration Panel whose judgement they had previously sought, and felt that it would be inappropriate despite the present economic climate to adopt a different approach.

"Of course next year any increase is likely to be very small following the same recommendation.

"It is entirely open to members not to have the increase on their modest allowances if they wish it," he added.

Cllr Rose will receive £8,530 as council leader in 2009/10 on top of his basic £4,111 councillors' allowance.

Ravi Subramanian, Unison's regional head of local government, said: "It seems wrong they're awarding themselves 3.3 per cent when the pay offer they have made to employees is 0.5 per cent.

"I think employees and taxpayers will think this is unacceptable and have understandable concerns.

"It seems like one rule for them and one rule for the people delivering services day in and day out. It beggars belief, given the offer for workers," he added.

Liberal Democrat leader Cllr David Fearn said it was the wrong decision, based on Independent Remuneration Panel recommendations made before the full impact of the credit crunch was clear.

Cllr Fearn added: "What I'm suggesting might be seen as a token gesture. However, it seems to me to be the right thing to do given the present perilous state of public finances."

The district council voted in favour of the rise at Town Hall in Matlock last Thursday.

To see how councillors' allowances are allocated, click here, then click: "Council - Open", then "2009 Council Agenda Front Sheets", then "2009-06-25 Council Agenda" and then "18. MEMBERS ALLOWANCES 2009/2010".