Communities and local government secretary Hazel Blears has urged councils to use their influence over health and education to compensate for financial hardship.
Ms Blears admitted that the comprehensive spending review had given local government a "tight" settlement, but insisted councils could act on priorities using budgets pooled with public sector partners.
Speaking to LGC at the Society of Local Authority Chief Executives & Senior Managers conference, she said councils could exercise a "wider influence over wider resources".
She said: "It's false to say that local government has not been favoured in the way health and education have. Health and education are our political priorities it doesn't mean local government doesn't have a say."
She also defended the government's response to Sir Michael Lyons' review, insisting Sir Michael said "council tax wasn't broke" so there was "no need to have a fundamental change around council tax".
She did add there was a need to maximise take-up of council tax benefits to protect the poorest.
Earlier, Ms Blears urged councils to make the most of new freedoms to demonstrate a "mature approach to governing, not waiting for permission fromWhitehall".