The amount of taxpayers’ money lost in failed Icelandic banks is edging closer to the £1bn mark, according to the Local Government Association.

Apparently some 123 councils have deposited money in Icelandic accounts, totalling £920m.

Embarrassed by its pitiful financial management, the Labour government said it “was working to get the money back and would offer expert help to any council in trouble.”

It follows criticism of the “emergency teams” sent to three councils allegedly hit by cash flow problems. Robert Pritchard, a senior member of one of the three councils identified as facing problems, said the troubleshooters seemed “more interested in defending the government line than getting the money back.”

“They were not from the government at all; they were from the LGA. Nobody from the government turned up,” the cabinet member for finance said.

“The only help our council and other councils need is for the government to help us get our money back. They have the power and resources to do that, so why don’t they get on and do it?” said Mr Pritchard.

According to the latest LGA figures, the councils with the largest deposits in Iceland include Kent with £50m, Hertfordshire with £28m, Somerset with £25m and Surrey with £20m.