Environment minister Sir Paul Beresford announced that Burnley, Hereford and Worcester CC, Kingston upon Hull City Council, Liverpool City Council, New Forest DC, St Helens MBC, Salford MBC and Southwark LBC were in the first tranche of actions against councils failing to meet financial targets in 1994-95.
The eight are accused of either losing more than £500,000 on one contract or failing to meet financial targets on five or more of their direct service organisation contracts.
Sir Paul said further notices for errant authorities would follow in the next few weeks. Others will escape sanctions because they have already put their DSO financial affairs in order or closed them down.
In 1993-94, 125 notices were served on 85 authorities for financial failure.