In a report called A critical partner: LGA winter review 2002, the LGA said it had had some success convincing the government to deregulate councils, but had faced proposals which threatened to undermine or bypass local democracy.
The report said the government had not been prepared to listen to councils and was determined to pursue policies which made it harder for them to operate.
It said: 'The government's decision to legislate to require councils to reimburse hospitals for the cost of beds occupied by older people is the starkest example of this.
The LGA's review six months ago said the government too often saw central prescription as the answer, despite the efforts of staff at the LGA.
It said: 'Councils are too constrained, both financially and in terms of their
ability to act.'
Six months on, this is still the case but localism and an agenda of deregulation, freedoms and flexibilities meant there was some cause for celebration.
The LGA report backed the comprehensive performance assessment. It said: 'The CPA process provides a foundation for an ambitious local government improvement plan and piloting genuinely radical freedoms and flexibilities.'
An ODPM spokesperson said: 'The central-local partnership is an important component in developing a constructive relationship that is essential.
'There have been significant achievements during the year. The LGA itself described the government's package of freedoms and flexibilities as a most significant step and said the package for high-performing councils is ambitious and will free them up to improve the services they can offer local people.
'We look forward to working with local government to continue improving services for local people.'