The town hall is currently considering its response to proposals for the reform of council tax benefit, which is part of the Government's wider shake-up of the benefits system.

And it has published proposals which would cushion the impact of the Government's changes on the borough's poorest households - in effect saving them from a £600,000 tax increase.

Finance spokesman Cllr Guy Senior said: "In many other parts of the country, people on low incomes may soon find themselves having to pay council tax for the first time.

"While the sums involved may be modest, to many households this will be an added burden they will struggle to afford.

"Here in Wandsworth, we want to do what we can to protect pensioners, the low-paid and vulnerable families who are already struggling to pay their bills.

"With our long record as a low tax authority we do not wish to start increasing the tax burden for those least able to afford it."

Wandsworth's proposals have been drawn up in response to a Government announcement that it is reducing by ten per cent the funding it gives to town halls to pay for council tax benefit.

Instead ministers have told local authorities to come up with their own schemes from next April and said they will hand them the grant to administer it.

Wandsworth is now consulting the public on its preferred approach, which is to maintain the existing rules and protect benefit entitlement at current levels. Instead of forcing the poor to pay, the council would pick up the cost.

A council report published earlier this month stated: "In an environment of welfare reform where households have already seen the level of housing benefit reduce and with further welfare reforms proposed, it is difficult to envisage householders seeing council tax as a priority debt above rent and other household essentials."

The report concluded: "In maintaining a version of the current scheme into the next year the council will provide an element of stability for these low income households."

Some of the shortfall in Government grant could also be offset by technical reform to the council tax system by changes to discounts and exemptions that apply to second homes and empty properties.

Around 23,000 people living in Wandsworth are currently eligible for council tax benefit. This includes more than 8,500 pensioners and 14,400 people of working age. The existing cost of the borough's scheme is just under £11m.

Council tax bills in Wandsworth are the lowest in the country. The borough's Band D bill this financial year is £682, compared to a London average of more than £1,300.