Chief executive Steve Stewart and fellow local authority bosses affected by the financial crisis met with government officials on Thursday.

However, he said it was still too early to say what the long term implications would be as the £23m is spread across four banks.

He said: "It is early days and there remains much uncertainty over the individual financial position of each bank, so we just can't speculate on what the precise financial impact will arise from this developing situation.

"However, I can reassure residents that the situation with Icelandic banks will not cause either an increase in council tax or service reductions.

"The county council can and will continue to operate normally.

"Like individual savers and other institutions, councils are required to make sure its revenue works hard.

"This means investing, as well as making sure we have money put aside for a rainy day.

"We have therefore invested in line with national guidance and on professional advice, and are required to spread our investments so our eggs are not all in one basket.

"Of course, these investments in positively rated banks were made before the credit crunch crisis.

"We are now adjusting our financial forecasting to reflect the potential loss.

"This will still leave us with surplus cash to invest, and operate as usual.

"Local government reorganisation will be unaffected, even if the worst case scenario happens.

"Our financial management has done exactly what it is supposed to do, spreading the risk, and allowing us to continue as usual."

The government and the Local Government Association (LGA) are working together so the impact can be fully understood.

When this information is available the position for Northumberland can be assessed fully.