First secretary Alun Michael has said that if agreements can be completed by April 2001 he will abandon proposals being considered by the Welsh Cabinet to follow England's lead and introduce service blocks at the individual council level.
He has also turned his back on English proposals that funding be conditional on winning official approval for service plans.
'I can assure you that the Cabinet has no intention of making the distribution of revenue support grant partly conditional on the approval of local authority service and funding plans as is mooted for England,' he said.
Mr Michael was writing to Welsh Local Government Association leader Harry Jones following the first meeting of the Partnership Council between local authority and Assembly members.
He made clear that local government representations in many areas, such their intense dislike of hypothecation, had hit home. A draft for the agreement will be discussed at the next Partnership Council meeting in February.