Councils who deposited money with Icelandic banks have been warned there can be no guarantees they will get their money back.

The country’s new business minister has refused to offer a promise to local authorities, warning the assets of the three banks that collapsed is not enough to pay all their creditors.

Kent County Council has £50million invested in three banks and a number of other district councils have between £1million and £6million on deposit. Kent Police has £10million deposited.

Negotiations with the administrators of the banks are continuing and finance officials from Kent and the London borough of Barnet have been representing the interests of the 123 councils who together have about £1billion tied up in Iceland.

Business minister Gylfi Magnusson said: "They [councils], as all other creditors of the collapsed Icelandic banks, will unfortunately have to wait until we have sold the assets of the collapsed banks. Unfortunately this takes time and a lot of creditors will not be paid back in full."

He went on to warn: "There simply aren’t the assets left in the collapsed banks that would be sufficient to pay all creditors."

Kent County Council said it remained confident it would eventually see its money returned.

Cllr Nick Chard (Con), cabinet member for finance, said: "I'm still confident and discussions and negotiations are continuing. Things are moving forward."

Kent has £18million deposited with the UK-based Heritable bank, £15million with Glitnir and £17million with Lansbanki.