Weymouth and Portland faces the deepest budget cuts of Dorset's councils after the government revealed provisional details of its English council grants.
The borough council will have 6% less to spend on services in 2011/2012 and 5.73% less in 2012/13 as it prepares to hold the 2012 Olympic sailing events.
The council admitted it faced a "tough challenge", but said it had put plans in place to make substantial savings.
Dorset County Council will see a 0.25% rise in its spending power in 2011/12.
But the authority said it was waiting for specific figures from the government over its settlement to put the forecasted 0.25% rise into context.
West Dorset council will have to make savings of 6.66% by comparison and Poole by 0.67%.
While Bournemouth said it was "disappointed" with cuts in its spending power of 3.85% in 2011/12 and 3.7% in 2012/13.
Weymouth and Portland council, which will see its government funding slashed by £1.45m over the next two years, has already agreed to share services with West Dorset in a move to save £8.5m over the next five years.
Councillor Peter Chapman, finance and assets brief holder, said: "All local authorities are facing a tough financial challenge.
"Weymouth and Portland has however risen to that challenge and we are leading the way in reshaping how local authorities deliver services.
"Through our merger of staff with West Dorset... we are identifying the most cost-effective and efficient ways of providing essential services."
The government said cuts to council spending reflected "the urgent need for the public sector to help put the country's finances back in order, keep interest rates down and prevent national debt escalating to £1.4tn of taxpayers' money".
"Ministers have taken a progressive and fair approach to calculating how the £29bn of central taxpayer funding for local government grants this year will be allocated.
"More money is being channelled at those areas of the country that have the highest levels of need."
The coalition said the "formula grant" from Whitehall for English councils would be reduced by 9.9% in 2011/2012 and by 7.3% in 2012/2013.
The cuts are part of a policy to cut central funding to local authorities by 28% over four years.