Four councils in England are being bailed out by the government because they are unable to balance their books.
Communities Secretary Robert Jenrick said the pandemic was responsible in some cases, but in others “very poor management” was to blame.
The authorities named as being in the most serious trouble are Eastbourne, Bexley, Luton and Peterborough.
It comes as the government announced a £2.3bn increase in funding for councils to use on core spending next year.
Local authorities have warned they are facing financial ruin amidst pressure from coronavirus.
BBC analysis in 2020 revealed the scale of the problems facing local councils, with nearly 150 authorities forecasting a combined budget shortfall of at least £3.2bn.
Some of the largest UK councils have been warning that they may have to declare themselves effectively bankrupt unless the government agrees to further support.
The government had previously provided almost £5bn in emergency support since the start of the pandemic to help councils deal with spiralling costs.
Opening a debate on local government finance support for 2021/22 earlier, Mr Jenrick told the Commons that a “handful” of councils were facing “serious financial challenges”.
Mr Jenrick said there was “quite a broad range” of reasons why additional taxpayer support was required – some due to management failings and others due to “the exceptional events of the past year”.
He added: “This aid is provided on an exceptional basis, with these councils subject to rigorous reviews of their financial positions, their governance, ability to meet some or all of their budget gaps for the next year without Government funding.
“Taxpayer support of this kind is never provided lightly and in return for the increased flexibility afforded to councils next year, we expect sound financial management with residents shielded from unaffordable increases.”
Mr Jenrick also announced a £50,000 fund for the Isle of Wight fund to review the challenges face by the council, residents and businesses on the island in terms of access to vital services, supplies and employment.
Labour says council budgets have been “stretched to breaking point”.
Shadow secretary of state for communities, Steve Reed, warned news of the bailout was the tip of the iceberg and council finances had “finally burst”.
He added: “Ministers broke their promise to give councils the funding they needed to get communities through the crisis.
“The government’s refusal to fund services properly means a dozen councils are already in talks to avoid bankruptcy and sadly dozens more are close to that point.”
Local authorities are required by law to have a balanced budget.
There are three ways those facing difficulty could do this: