Average council tax rises in the capital will be just 1.2 per cent this year - less than half the national figure - it was revealed today.

A survey by London Councils reveals that more than a third of councils are freezing council tax although Hammersmith & Fulham is actually reducing it by three per cent.

The councils say they have managed to control rises by reducing staff. However, there have been fears that services will suffer and economics expert Tony Travers said: "The message the councils are hearing from the Government is one of austerity.

"The reality of that is that they are hunkering down, and while they are minimising the rise in council taxes we will see a reduction in spending and in frontline services."

London Councils said last financial year boroughs had delivered more than £376million efficiency savings.

Chairman of the body and leader of Kensington and Chelsea council Merrick Cockell said: "Sound financial planning has meant that at a time when all of our residents are feeling the pinch we can keep council tax rises as low as possible We will do everything in our power to reduce [the recession's] impact on our residents."

Examples of cost cutting include Hammersmith & Fulham which saved more than £13 million this year by reducing staff numbers and office space.

This week councillors also voted for a pay freeze for senior staff and their own allowances,

In Southwark, the council is to begin relocating staff as part of its attempt to save £35million

About 2,000 council office-workers will move into a new central headquarters in Tooley Street from 30 buildings scattered throughout the south London borough.

The new building is one of the greenest buildings in London, designed to reduce carbon emissions by up to 20 tonnes per year.

Lambeth is saving £10million by restructuring staff and has reduced the wage bill for agency staff from £4million to £1million.

This is the first full survey of council tax levels, although some of them have not yet been formally agreed.

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