Westminster Council is going ahead with a £23,000 slap-up dinner - despite trying to claw back millions lost in the Icelandic bank collapse.
Cllr Paul Dimoldenberg, leader of the Labour Group, urged the council to scrap the black tie event, which comes as the Town Hall axes 200 jobs and amid ongoing efforts to retrieve some of the £17million drained from its coffers by the banking crisis.
More than 250 guests, including councillors, diplomats and local organistions, are due at the annual Civic Dinner, at Lancaster House, a mansion in St James's on March 22.
The Conservative-run council says the dinner is a chance to thank local organisations for their efforts, a claim rubbished by Cllr Dimoldenberg who said the majority of attendees will be "dignatories''.
"It is completely out of touch with the reality of life in 2009," said Cllr Dimoldenberg, of Queen's Park ward.
"Spending £23,000 is total madness at a time when many Westminster residents are losing their jobs and homes.
"Westminster Conservatives claim that despite losing £17m it is still 'business as usual' at the council. It looks more like 'snouts in the trough as usual."
Mr Dimoldenberg called on David Cameron to denounce the spending.
Defending the dinner Westminster's deputy leader, Cllr Robert Davies, said cash for the event was ringfenced at the start of the year and will not come out of the budget for other services.
"Over the years this event has given the council an opportunity to thank the many thousands of people in the community who work so hard on behalf of their fellow Westminster residents.
"Just some of the people we wish to show the council's gratitude to for their essential work include representatives of faith groups, the emergency services and local voluntary groups."
The council said it can not release the guest list before the all attendees have responded by the end of the month.
But the criticism comes at a tricky time for Town Hall bean counters still reeling from the loss of millions of taxpayers' money in high-risk deposits in failed Icelandic banks in October and November last year.
Opposition groups asked why the council did not heed apaparent warning signs to withdraw its momey from high interest and high risk accounts.
Keen to reassure residents the council is on top of their finances as the recession bites deeper, Cllr Davies added: "We all know that the coming year is likely to be difficult. As a council, we cannot and will not shirk our responsibilities.
"We will concentrate on helping people and businesses through these difficult times.
"Moreover, we will not stop serving our communities, but actually seek to raise our standard of service."