Canterbury City Council has revealed it has £6million deposited in two collapsed Icelandic banks.

It has £4million in Heritable - the UK subsidiary of Landsbanki - and another £2million in Iceland's third largest bank, Glitnir, put under government control late last month.

Chief executive Colin Carmichael said the money was invested after government guidance as part of the council's treasury management strategy.

He added the situation was not the council's fault and was not through "reckless investments."

Mr Carmichael said the council would seek government "guarantees" through the Local Government Association and had written directly to relevant departments.

He said: "We and others have taken the matter up with the Local Government Association for them to seek guarantees from government, and the chairman of the LGA has already written to the chancellor of the exchequer.

"We have written directly to the relevant government departments to gain government guarantees on local authority investments.

"If that is not immediately possible, then to gain some clarification on what the position is likely to be for those councils with investments with Icelandic banks.

"Councils find themselves in this position through no fault of their own, and they have not undertaken reckless investments.

"They have followed government guidance in investments, so we are making a strong argument that we should not be penalised for this."

Kent County Council has insisted its services will not suffer after it revealed £50million is deposited with Landsbanki, Heritable and Glitnir.

It wants an urgent meeting with the chancellor, Alistair Darling, and has vowed to "fight to get every single penny back".

At least 20 UK councils have hundreds of millions of pounds invested in troubled Icelandic banks.