The increase almost reached the government's maximum limit of five per cent.

And despite a year of extensive cutbacks, including service closures and compulsory job losses, the council has announced an extra £1.5million needs to be saved over the next three years.

But other groups whose budgets make up the tax bill – including the fire service and county council – kept their increases below inflation.

This means overall council tax bills will increase by 3.9 per cent, just below the current inflation rate to an average of £1,419.67 excluding town and parish precepts.

The tax plans will need to be approved by councillors at a meeting on Monday.

District council chief executive David Wheatcroft said the authority was pleased to have managed the £1million budget saving needed in the last year.

"I think we have done it in a balanced and sensible way, but I also recognise that we have got to do more," he said.

"We have identified a way forward and are again looking at the same sort of thing."

Mr Wheatcroft said hard times lay ahead for the district council, as they will be given the minimum government grant level for the next few years.

"This year we've got a one per cent government grant and for the next two years we are going to get half a per cent.

"Because our property is valuable they say we should be raising money through council tax."

"It will result in us having to save £500,000 each year for three years, so we are going to get progressively worse off."

Mr Wheatcroft said further savings would be gathered by careful budgeting, private sector contracts and sharing services with other areas.

"It's also about getting the property and land we have to work harder for us," he added.

He said the district council needed less space now, and had sold their Bath Street offices in Bakewell and planned to demolish the town hall annex.

Amber Valley borough council agreed an increase of three per cent in their share of overall council tax this week - the second lowest increase in the county.