Lambeth is London's worst-run borough

It is the only local authority in London - and one of only five in the country - to be given just one star in annual performance scores awarded by the Audit Commission.

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However, Lambeth's rating was dubbed "perverse" by the council's Labour leader Steve Reed, who said his borough's performance had only worsened in cultural services and had improved or stayed the same in all other areas.

The council - run by Labour after the joint Liberal Democrat and Tory administration was ousted in last year's local elections - is said to be "improving well" overall and providing good social care, environment and benefits services.

Mr Reed said: "The star ratings don't give a full picture. If you read the narrative, Lambeth, according to the Audit Commission, is improving in three quarters of all services. It would be wrong to say Lambeth is the worst-performing authority."

However, Lib-Dem opposition leader Ashley Lumsden said: "When we took control in 2002 it was a zero-rated authority. We raised it to two stars over the next four years but after a year of Labour they have lost one of them.

"The council is slashing services, particularly for older and vulnerable people, in its budget and is losing a lot of its reputation locally."

Mr Lumsden added that Labour proposed to increase council tax bills by 4.99 per cent, a fraction under the maximum five per cent permitted by the Government.

"People will be paying the highest increase in London but getting the worst council services," he said.

Five boroughs - Camden, the City of London Corporation, Kensington & Chelsea, Wandsworth and Westminster - are among the 10 elite authorities in the country to get the maximum four stars and be classed as "improving strongly". This is an improvement on last year, when only Wandsworth and Kensington & Chelsea achieved maximum scores.

Bexley and Sutton also received four stars this year but they are only "improving well". Bromley scored the maximum but its improvement rating is under review.

Havering and Waltham Forest are among the fastest-improving councils, having both gained two stars to secure a three-star rating this year.

Redbridge, Hackney, Bromley and Barking & Dagenham each gained one star. A year ago, Waltham Forest - one of the five Olympic boroughs - was London's worst performer.

Labour leader Clyde Loakes said: "We have focused on services that matter most to residents - cleaning our streets, better recycling, better education and care for the elderly."

Three London councils - Richmond, Wandsworth and Westminster - were given top marks for value for money and, for the third year in a row, no borough in the capital suffered the embarrassment of failing to achieve a single star.

The ratings - known as the comprehensive performance assessment - are based on inspections by the Audit Commission, education watchdog Ofsted, the Commission for Social Care Inspection and the Benefit Fraud Inspectorate. Almost 80 per cent of the 149 authorities assessed fell into the top two categories.