South Somerset Council says it has received the "toughest cut of all Somerset councils" with a grant reduction of 15.7%.
The authority said the government had made no allowances for inflation, so the cuts translated to a 20.3% decrease in real terms.
A total of £1.4m is being cut from its 2010/2011 grant and a further £0.9m the following year.
Its overall spending power has been reduced by 6.5% to £21.8m.
Council leader, Tim Carroll, said: "This is the greatest grant cut in Somerset and the government has only covered spending for the next two years.
"If it means using some of our reserves this year to allow time to make considered decisions for future years and their uncertainties, then this is the path we will follow."
The council, which funds public services for one of the largest districts in the UK, said it had prudently already assumed a 29% cut over four years, but the cuts were frontloaded.
This means the biggest reduction is in the first year.
Councillor Carroll said: "There is no doubt that this level of frontloaded cuts will affect us, but we will do everything we possibly can to protect and maintain the front line services that are valued by our residents."