Rising inflation will force Ealing Council to slash £10m from next year's budget and could lead to staff cuts.
Work is already underway on how best to cut costs and council leader Jason Stacey is warning that some temporary workers may face the axe to help reduce the impact on front line services.
Human resources, social services and other departments could be pooled with other west London councils to try to counter soaring inflation, which rose to 4.4 per cent in July - more than double the Bank of England's two per cent target.
Despite ongoing rate increases and rising bills, the council's budget remains constrained by contributions from central government, which were fixed before the economic slowdown.
Councillor Stacey said: "Half of what we spend comes from central government. The government gives us a three year settlement which was already below inflation. Last month they announced that inflation had gone up from 2.3 per cent to 4.4 per cent and that is going to make it tougher. We're already looking at where we can make savings.
"We look at all areas of the council, but we tend to try to go for administrative back office stuff because we don't want to cut services. We try to get as much efficiency as possible from what we're doing.
"We've set a £10m savings budget and we're going to stay with that at the moment and just wait to see how our providers' bills turn out for the year ahead. We took £16m out in the first year but every year it gets harder because we have to save more and more."
He said further pressure would be placed on the council because the onset of recession means more people having to rely on benefits and other services provided by the local authority.
The council's budget is reviewed annually in October and November when each department is asked to come forward with proposals on how to cut its own budget.
Proposed cuts will go before the council's scrutiny committee from December and must be agreed before the annual budget is set in March next year.
Brian Blake, of Ealing UNISON, said consultants and costly agency workers used to fill permanent positions should be the first to face the axe "These cuts are going to impact on front line services. We're already almost putting sticking plasters over big cracks in services."