LONDON - Council tax bills will rise by an above-inflation average of four percent this year, the Local Government Association said on Thursday.

That would push the average household's tax for 2008-2009 to 1,145 pounds at a time when many families are facing higher living costs and below-inflation pay rises.

LGA Chairman Sir Simon Milton blamed inadequate government funding and extra demands on councils for the tax rise.

"Nobody likes paying more council tax but this year town halls are making enormous efforts to keep bills down," he said in a statement. "Council tax would have been a lot lower with a more realistic central government grant.

"The toughest financial settlement in a decade has left councils with difficult decisions to make locally."

Official estimates of the number of immigrants in some areas had left councils "short-changed", he added.

Opposition parties said the rises would hit many taxpayers who already face below-inflation pay deals and higher prices for petrol, fuel, transport and food.

"The government's decision to limit public sector pay to 2 percent sits starkly alongside the fact that council tax is set to rise by twice that amount," said Liberal Democrat Shadow Local Government Secretary, Julia Goldsworthy.

"Thousands of people across the country will now feel the pinch as councils are forced to limit social care services to those in critical need."

A spokeswoman for the Communities and Local Government department had no immediate comment.

Local Government Minister John Healey said it had given councils enough funding and there was no excuse for "excessive" council tax increases.

"This is a fair and affordable settlement for councils with over 900 million pounds extra core funding next year, in a tight financial climate for central and local government alike," he said in comments reported in the Guardian.

Help the Aged's Policy Manager Anna Pearson said: "The irony is that while council tax takes more and more money from older people's pockets, the services many of them rely on are consistently being cut back."