Cosla's move was prompted by budget difficulties following the discovery that its reserves stand at £162,000 rather than a previously anticipated figure of around £500,000. The convention had been working towards a deficit budget for 1997-98 of £289,000.
As expected, Cosla last week decided to pull out of the LGIB on the grounds that it could provide the services directly to Scottish authorities more cost-effectively.
However, the convention will stop paying the LGIB from December in order to save £24,000 on its annual £112,000 contribution. This was despite confirmation from Cosla chief executive Douglas Sinclair that the LGIB had been repeatedly assured that funding would not be withdrawn before the end of the financial year.
He said he would be consulting with members about the implications of Cosla's decision, including the legal implications.
Mr Smith added that the bureau had a strategy for dealing with the financial effects of Cosla's withdrawal which included freezing two vacant posts.
'We are certainly hoping to avoid compulsory redundancies,' he said.