The 4% rent hike faced by council tenants in Caerphilly County Borough has been blamed on the Labour-run Welsh Government.
Caerphilly Council leader Allan Pritchard, of the Plaid-led authority, said the guidelines are set by the Welsh Government.
He said: “The situation is that the level of rent increases is determined by the Welsh Government and not by local authorities.
“The Welsh Labour Government decides guideline rent rises for local authorities and housing associations across Wales. This current average rent increase for tenants is proposed as 5.1%, although the actual increase being recommended within Caerphilly County Borough is 4%.
“In fact, the Welsh Government penalises local authorities by the loss of subsidy unless they follow their dictate on rent increases.
“No increase is welcome in this difficult current financial climate but unfortunately it falls outside of the council’s control.
“I would also point out that Caerphilly is obliged to pass £7m collected from our council house tenants back to the UK Government treasury coffers in London.
“In the same way that Caerphilly County Borough was freezing its council tax, the £7m that the government is stripping from our tenants should be used towards the freezing of rents during this time of suffering, soaring bills and job losses.”
A Welsh Government spokesman said: “We consulted on a proposed new rent policy for social housing rents that would consistently apply to Council and Housing Association landlords, would be fairer to tenants and reflect the type, size, location and quality of homes. We are currently revising the policy proposals in light of consultation responses. We are also in discussions with the UK Government about the potential reform of the Housing Revenue Account Subsidy system.”