Councillor Mike Hancock MP, who is in charge of business affairs at the council, told The News in October he wanted to see a guarantee to pay council contractors within 10 working days come into force 'within weeks'.

But the council, which has a 30-day payment policy, has now calculated such a measure could cost up to £300,000 per year in revenue, because each individual payment would be in the bank for 20 fewer days, losing the council a huge amount of cumulative interest.

Instead, the 10-day payment scheme, along with a planned soft-loan scheme which would top up loans from commercial lenders, packs such a financial punch that they will have to be approved at a full council meeting.

The next meeting is scheduled to take place in February.

Mr Hancock said: 'I can't think of anything from a city perspective that is of a greater priority, but it's how we do it. I think we've got to move this and I'd like to call a one-item meeting for it. The consequences are quite demanding for the council, so we've got to do it right.'

But Mr Hancock's Planning, Regeneration and Economic Development Committee has been able to approve a slashing of rental rates for business centres around Portsmouth, to be paid for from the committee's own budget.

The move has immediate effect, and means small firms will enjoy a 40 per cent discount on their first half-year rent at the Portsmouth Enterprise Centre, Challenge Enterprise Centre and Victory Business Centre, with a 20 per cent discount for the next six months, and a 10 per cent discount for the following 12 months.

Jonathan Shaw, who heads up the newly-formed South-East Economic Delivery Committee, said: 'The government has said it'll pay in 10 days and, if the government can do that, I think local authorities should too.

'I work in a big department, the Department for Work and Pensions, which has a budget of tens of millions and, if we can do it in government, I'm sure it's within the ability of local government.'