Council workers in England, Wales and Northern Ireland will have their pay frozen for a third consecutive year.
The Local Government Association confirmed a pay freeze for 1.6 million local government employees for 2012/13.
It had been widely anticipated by councils but the GMB union said it was a "deliberate political choice" aimed at keeping council tax down.
The LGA said councils were left with little choice due to rising costs and shrinking local government funding.
'Difficult but right'
Spokesman Sarah Messenger said it had been "a very difficult decision to make but it is the right one for council taxpayers and the workforce as a whole".
"Increasing pay would mean more job losses and cuts to the services people need," she said.
"While the financial outlook for councils is bleak, we are keen to begin discussions with the unions on a package of reform of pay and conditions that may enable us to avoid a fourth year of pay freeze in 2013."
The chancellor announced in November that a wider public sector pay freeze, due to end in 2013, would be followed by a 1% cap on rises for the following two years.
Public sector workers earning less than £21,000 were promised a £250 pay rise this year. But local government pay is negotiated separately between employers and unions, via the National Joint Council for local government services, and council staff did not get the rise.
Unison, the GMB and Unite had asked for a pay increase - particularly for the lowest paid workers.
GMB national officer Brian Strutton said there could be industrial action over the issue, if employers did not go to arbitration.
He said: "The politicians who lead local councils are a disgrace to the workforces they employ for offering no pay rise for the third consecutive year while feathering their own nests.
"Council leaders' pay has shot up and councillors vote themselves higher allowances while the carers, dinner ladies, dustmen, social workers, school support staff and all the other council workers serving their communities will have seen their pay fall in real terms by over 15%."
Council tax freeze
He added: "This three-year pay freeze is not an austerity measure. It is a deliberate political choice by local government politicians who want to win votes by keeping their workforces' pay at poverty levels to fund council tax freezes.
"I don't know any other workforce in the economy that has had to bear this and 150,000 job losses and cuts to terms and conditions."
Labour, which has backed the 1% cap as a way of safeguarding jobs, said "employers should get back round the table to work out how the lowest paid council workers can be helped in these tough times".
The amount of money local government gets from Whitehall is due to fall by 7.1% a year between 2011 and 2015 as part of the coalition's deficit reduction drive.
The local government spending watchdog, the Audit Commission, has said town halls have had to come to terms with a £3.5bn drop in central funding this year, including the effect of the freeze in council tax in England encouraged by ministers.
Teachers' and firefighters' pay is covered by separate national pay arrangements.