Fire service bosses facing major financial problems are to submit "a robust case" to the Government for next year's budget to not be restricted.

County Durham and Darlington Fire Authority, which imposed a 19.8 per cent precept as its share of local council tax this year, has been told its rise will be capped next year when grants are handed out.

Officials were left with a huge dilemma after agreeing a budget of about £29m for the coming year, but only receiving a central grant of £13.5m.

The authority later trimmed its budget to £26.8m and said it would have to meet the shortfall via a substantial rise in the council tax.

The alternative, it was warned, would have been job losses among firefighters and drastic cuts in services.

But the Office of the Deputy Prime Minister took action over this year's rise by warning that a cap could be applied for 2005/06.

The authority is now drawing up its appeal to the Government against the announcement and will submit it within the next three weeks.

A report from chief fire officer George Herbert and treasurer Stuart Crowe says: "Work is well under way in order to provide a robust case for the Minister's consideration."

A memo has also been sent out to all staff in a bid to allay fears about the consequences of the financial crisis.

The fire authority is due to meet in Durham on Thursday (May 20) to consider the matter.