Local authorities have called on Alistair Darling to protect the money they have invested in Iceland's banks.
The chancellor of the exchequer is being urged to protect taxpayers' cash invested in Icelandic-owned banks by local councils.
It is thought that hundreds of millions of pounds in tax money have been invested in financial institutions such as Icesave and dozens of local authorities are now calling on Alistair Darling and the government to protect their assets.
According to Margaret Eaton, chairman of the Local Government Association (LGA), some councils may take a financial hit because of investments made in Icelandic banks, although she added that losses should not affect frontline services.
More than 20 local authorities have been identified as holding deposits in banks in Iceland, together valued in excess of £840million.
Yesterday, Channel 4 News at Noon revealed that the Metropolitan Police Authority (MPA) has a total of £30 million invested in Icelandic banks.
"Local authorities and police authorities are obliged to invest responsibly and deposit money in a wide range of banks and other financial institutions, after independent advice and within strict guidelines, to make sure that any risk is spread and there is no impact on the taxpayer," said the MPA in a statement to the news channel.
The statement added that the MPA is fully supporting calls from the LGA to extend the assurances given to the public to local authorities and police authorities.
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