Boris Johnson has abandoned plans for a three-year mega spending plan amid ongoing coronavirus chaos.
The Treasury confirmed it is scrapping a planned multi-year spending review, and instead holding a one-year review at the end of November.
Chancellor Rishi Sunak said the decision was taken to prioritise the Covid-19 response and focus on supporting jobs, setting departmental resources and capital budgets for 2021-22, and the devolved administrations' block grants for the same period.
Funding for the NHS and schools will remain multi-year, along with priority infrastructure projects.
Town hall leaders expressed dismay at the news and said it would make it difficult to plan how to provide vital services.
Cllr James Jamieson, the Conservative Chairman of the Local Government Association, said: “It is hugely disappointing that councils will only get a one-year funding settlement for the third year in a row.
"This makes it incredibly difficult for them to plan how to provide local services our communities rely on and which have proved so vital during the pandemic, including public health, adult social care, children’s services, homelessness support, and help for those in financial hardship."
And Cllr Sharon Taylor, of the District Councils’ Network, said councils would be setting budgets "in the dark" and would inevitably have to make cuts.
The Treasury said: "While the Government would have liked to outline plans for the rest of this Parliament, the right thing today is to focus entirely on the response to Covid-19 and supporting jobs - that's what the public would expect."
It outlined three areas of support including supporting employment, funding public services in the fight against the virus and investment to unite and level up the country, it said.
Mr Sunak added: "In the current environment it's essential that we provide certainty.
"So we'll be doing that for departments and all of the nations of the United Kingdom by setting budgets for next year, with a total focus on tackling Covid and delivering our Plan for Jobs.
"Long-term investment in our country's future is the right thing to do, especially in areas which are the cornerstone of our society, like the NHS, schools and infrastructure.
"We'll make sure these areas crucial to our economic recovery have their budgets set for further years so they can plan and help us Build Back Better."
