Cambridgeshire has agreed to increase funding to schools by£15.5m next year -£4m more than the council had budgeted for - in response to pressure from the Department for Education & Skills.
The extra provision will be partially funded by a£1.75m advance from the DfES, to be deducted from the council's standard fund allocations in 2006-07 and 2008-09.
The remaining£2.25m will be raised through council tax, which will now increase by 6.9% instead of the 6% the county had been planning.
Cambridgeshire leader Keith Walters (Con) said the compromise, under which the council will passport 96% of its increase, was the best the council could have achieved.
'Had we lost our battle with government, Cambridgeshire's residents would have faced a 9% increase [in council tax],' he said.
But education secretary Charles Clarke said he was 'very disappointed' Cambridgeshire would still not be passporting in full, despite an 8% increase in formula grant.