Local authorities have been urged to make more savings, including cutting pay, scrapping chief executive posts and ending councillor pensions under fresh austerity moves.
Councils in England will see their spending power reduced by 1.7% next year, Local Government Secretary Eric Pickles announced, leading to warnings of more cuts to services.
Unison said libraries, day centres and youth clubs were already closing under previous cuts, care was being rationed, and young people found that careers advice had "all but disappeared".
The Local Government Association said: "Today's confirmation of a further reduction in funding for local services comes on top of the unprecedented cuts councils already have to implement. This is bad news for local services and undermines the role councils can play in promoting economic recovery."
Mr Pickles told MPs the settlement represented a "bargain" for local authorities, adding that the Government would offer support for the third year so that council taxes could be frozen.
A small number of local authorities will require larger savings to be made, but Mr Pickles said no council will face a loss of more than 8.8% of their total spending power thanks to a new efficiency support grant.
"As the name implies, to qualify, councils will have to improve services to receive this grant. It is unfair on the rest of local government to expect them to subsidise other councils' failure to embrace modernity," he said.
Mr Pickles said councils were "sitting on" a record £16 billion of reserves, adding: "Councils must keep doing their bit to tackle the inherited budget deficit because they account for a quarter of all public spending and still get through over £114 billion of taxpayers' money each year. Today's announcement is a fair funding deal that will reward councils ready to strive for their communities and gives them another year to get their house in order."
The 1.7% cut in spending power from next April compares with last year's comparable figure of 3.3%. The Government published a list of "sensible savings" ideas for councils, ranging from opening a coffee shop in the local library to cancelling "glitzy" award ceremonies.
Shadow communities and local government secretary Hilary Benn said Mr Pickles' "unfair cuts" meant the loss of libraries, sports centres, Sure Start centres and places at women's refuges, with the poorest areas hardest hit.
https://www.gov.uk/government/organisations/department-for-communities-and-local-government(Department for Communities and Local Government)