HILLINGDON Council has appealed for help from the government after it emerged it has £20million invested in the crippled Icelandic Bank, Icesave.
The online bank hit crisis this week after its parent bank Landbanski was nationalised by Iceland.
It is feared that over 20 councils have up to £1billion in the stricken bank, and Hillingdon is one of them.
Councillor David Simmonds, deputy Leader of Hillingdon Council, said: "We would like to reassure residents that our investment in the Icelandic banks is only a small part of our total investments and will have no impact on the delivery of our services.
"Like all councils, we are expected to invest our money to ensure we get the best return for our taxpayers. We follow the advice and guidance of the Treasury and invest in banks that only have the highest credit ratings. In these highly unusual times, these ratings are changing on a daily basis.
"The amount we have invested in these banks is £20m and as many councils are in the same position as us, we are asking that the government supports us by guaranteeing these investments."
Eight London boroughs have also been affected along with a further 12 across the country, and Kent County Council is reported to have as much as £50million invested in the banks.
Eric Pickles, Shadow Local Government Secretary, said: "Local government finances are now at risk and people will be concerned about their local services and council tax bills."