Councillors from all parties will need to work together to make £40m of savings over three years, Dundee City Council has said.
The depute convener of the policy and resources committee, Willie Sawers, said political differences should be put aside for a "consensual approach".
The cuts would mean "tough decisions", but were necessary to balance the budget, Mr Sawers said.
More than £20m has to be saved over the next financial year.
The remainder of the savings will be made between 2012 and 2014.
The figures will be put to the policy and resources committee in a meeting on 23 August.
Mr Sawers said: "The financial squeeze imposed on us by the Westminster government is unprecedented and the overall financial picture has worsened as the implications of UK budget cuts have become clearer.
"Finding this level of savings is going to mean some very tough decisions will have to be made. We will have to work smarter and we will be looking to introduce new ways of delivering and modernising council services."
He said the chief executive was developing a strategy to look at "prioritising and redesigning services".
The committee report also proposes the setting up of a new cross-party board, chaired by the chief executive.
The new board would guide and support the necessary changes.
Mr Sawers added: "In the best interest of the city, we would like to move forward from the old confrontational exchanges between parties that have characterised previous budgets and draw on the collective experience of councillors from all parties including independents.
"Given the scale of the challenge that is facing us as a council and a city, I am hopeful that the proposal for a new consensual and co-operative approach will be welcomed."
The council's budget for the next financial year will be set in February 2011.