Some 13 councils face financial problems as a result of losses from the collapse of Icelandic savings accounts.
In total £858 million has been lost by 116 councils across the UK, but negotiations between the Local Government Association (LGA) and the Department for Communities and Local Government (DCLG) highlighted councils facing risk.
A joint LGA and DCLG statement read: "Thirteen councils have said that they may face short-term difficulties but we have no reason to think that wages will not be paid or that services could be at risk at these authorities.
"Financial experts will be working with three of these councils from today and will report interim findings shortly."
Yesterday, the LGA called for an inquiry into credit reference agencies, which deemed Iceland to be a safe haven for their funds.
Over the weekend a team of officials and lawyers from the Treasury flew into Reykjavik to discuss the problem. While retail savers look set to receive their cash, the fate of councils is still uncertain.
The government initially took the line that councils were more informed as investors than retail depositors and so knew the risks of investing in Icelandic branches of banks in the UK.
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