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The funding of police forces in England and Wales will be cut by four per cent, it has been announced.
Policing minister Nick Herbert said the reductions would be "challenging" but insisted the savings were possible while "protecting the front line".
Under the terms of the settlement central funding will fall to £9.3bn in 2011-12, then £8.8bn the year after.
Forces will be given greater freedom to decide how to allocate the funds, with specific sums for crime fighting and the basic command unit being absorbed into the main police grant.
Herbert said the government will "play its part" in continuing work with authorities and forces on value for money.
In a written statement, he said this work will cover more "effective procurement at a national level, greater collaboration between force and other partners".
They will also seek to remove "unnecessary bureaucracy which adds costs and impedes a sharp focus on front line policing".
A further £50m is going to be set aside to cover the costs for the first elections for local police commissioners.
Herbert added: "This amount was specifically included in the police settlement for this purpose and has therefore had no impact on allocations to forces."
The policing budget for the Olympics in 2012 was also unexpectedly reduced, from £600m to £475m.
"At this stage, with almost two years before the games begin, we estimate that it should be possible to deliver the core cross-government safety and security programme for about £475m," the policing minister said.
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