Council officials propose to save £17m during the next financial year to help cope with Government-imposed savings targets and spending cuts.

They intend to save £1.26m by switching a range of community support services, which include home care provided to elderly and disabled people, to independent organisations.

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Other reductions include £4m from staffing, which councillors say will be saved by reducing sickness absences and by making efficiencies in areas such as human resources and finance.

About £1.2m recovered through the way contracts are awarded, making better use of the council's fleet of refuse lorries will save £300,000. Another £300,000 will be saved by improving the way children with special educational needs are transported to and from school.

The council's ruling Conservative-Liberal Democrat administration insists the savings will be made without cutting services.

From April, and each year until 2011, the Government is expecting all local authorities to find savings of three per cent – the £17m in Leeds is well above that target.

Since 2005 the council has made efficiency savings of well over £65m and a previous three-year target was met in two years, with savings of £12.7m more than ministers demanded.

Senior councillors were devastated when it was announced before Christmas that the city was to lose millions of pounds of Neighbourhood Renewal funding, used to support projects in some of Leeds' most deprived neighbourhoods.

Coun Richard Brett (Lib Dem, Burmantofts and Richmond Hill), deputy council leader, said: "This isn't about cutbacks. It is about using the resources and money in better ways, making more use of technology and reducing bureaucracy."

The council meets next Wednesday to set its 2008-09 budget and Labour is warning people to expect rises in a range of council charges.