Blackpool Council could cut up to 1,000 jobs, in an attempt to save £32m over the next financial year.
Council leader Peter Callow said the authority has started negotiations with unions over plans to cut between 800 to 1,000 jobs.
Compulsory redundancies and changes to services were made inevitable as a result of the Government's Spending Review, Mr Callow said.
The council is looking at other cost cutting steps including pay freezes.
Mr Callow said: "The government has had to act to clean up the mess left by the previous Labour administration and there is no doubt that this is a terrible situation we are in, through no fault of our own.
"A large number of jobs will go and that is the reality we are facing."
Mr Callow said 260 jobs were at risk earlier in the year but only 30 people were made redundant, due to a combination of voluntary redundancy and redeployment.
The Conservative-run authority is also looking at a number of other measures such as introducing car parking charges for staff.
Flexible working and freezing pay increments were also being discussed with trade unions to help save £2m to try and reduce the job losses.