Police officers had to forcibly remove protesters from Islington town hall's public gallery, as the council became London's first to set its new budget.
On Thursday night, councillors in the north London Labour borough agreed to make £40m cuts in the next year.
About 50 protesters were removed from the meeting, which was then moved to another room without the public.
Labour council leader Catherine West said: "There is a lot of anger over the cuts, which I share. "
But Councillor Terry Stacy, leader of the Liberal Democrats in Islington, said: "The cuts agreed last night were the wrong ones for Islington.
"They have failed to cut communications and spin doctors.
"They are wasting millions on giving bankers' kids free school meals, while cutting services for the elderly."
The authority had a budget of £320m in 2010-11, which will be reduced by £40m in 2011-2012, while 350 jobs will be cut from a total of about 3,000.
Children's services and environment and regeneration budgets will be worst hit by the cuts.
Before the meeting where the cuts were agreed, hundreds of protesters marched along Upper Street.
One protester said: "Islington has so much poverty. It's only going to exasperate it and make the gap between affluent people and people on low incomes even more."
Ms West said: "We faced very tough decisions to set our budget and to make sure we do everything possible to protect our most disadvantaged residents.
"This is a very difficult budget, but Islington would suffer a lot more if we refused to make any cuts and government stepped in."
No arrests were made.
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