Council tax is set to rise by 1.9 per cent, sparking calls of derision as the increase surpasses the rate of inflation.

Merton Council has dismissed the criticism, heralding the increase as the lowest in 15 years and below an inflationary measure taken over a course of 12 months.

Band D tax payers will fork out an additional £25 a year, taking the total to £1,429 as the local authority imposes a 2.5 per cent rise on its share of the bill - the Greater London Authority has frozen any increase on its share of the levy.

Merton’s opposition leader, Labour Councillor Stephen Alambritis, said: “The Tories could have easily frozen tax.

“In today’s climate, the amount is still an increase and comes as they stash away another £3m in the reserves and another £2m into a contingency fund.”

Merton’s deputy leader and cabinet member for finance, Councillor Samantha George, said: "This budget shows that despite the difficult economic climate and the fact Merton receives one of the worst levels of funding in London from Central Government.

“We are absolutely committed to keeping council tax as low as possible to put our residents' needs first."

Protesters gathered outside the civic centre last week to oppose a council tax increase, supported by members of the Taxpayers’ Alliance.

Led by Wimbledon resident Donna Wells, they claim households are being plunged further into debt as the council increases the number of court bailiff visits and court summons against those struggling to pay their bills.

She said: ”I couldn’t afford my council tax bill and was threatened with imprisonment. I’ve been pushed onto benefits by the system.”

Ms Wells used to work four days a week, but is now working only two in order to qualify for benefits. Coun George said: "Merton Council has a duty to all council taxpayers, with the majority paying on time.”

Tim Aker from the Taxpayers' Alliance said: "People are angry with a council tax rise and feel the council isn't helping them out in these difficult times.”

The proposed budget has to be ratified at a full council meeting on March 4.