The axe could fall on up to 500 Croydon Council employees as the authority faces cutting its spending by £93m in three years.

The scale of predicted job losses emerged in the same week the council revealed it expected to shell out almost £8m more than budgeted for between 2014/15, a forecasted overspend shadow cabinet members claimed was "the largest in memory".

Labour councillors blamed the previous Conservative administration's failure to address the root causes of the deficit, including homelessness, looked-after children and a reliance on agency staff.

The expected overspend compounds the financial challenges to the council, which must trim its spending by £92.8m by 2018 in the face of shrinking Government funding. 

A report presented to the council's scrutiny committee last week by Richard Simpson, director of finance, said: "The gap of £92.781m over the period 2015/18 is hugely challenging.

The increasing reduction of grant income alongside increasing demands on expenditure means significant cost reductions will continue to have to be made."

The council has already reduced its expenditure by £98m since 2011, shedding 430 jobs in the process.

Councillor Simon Hall, cabinet member for finance, admitted a similar number of posts were likely to go between 2015 and 2018, although he said no decisions had yet been made on where cuts would be and stressed not all losses would be redundancies. 

He said: "We would anticipate it being over the space of a number of years and a lot of that could be done by not replacing people that leave or through voluntary redundancies, as opposed to some big round of compulsory redundancies. 

"The hard truth is you can't close a £90m budget gap without some reduction in staff levels."

Coun Hall insisted the £7.8m overspend projected for 2014/15, discussed in Monday night's cabinet meeting, was "legacy" of the previous council administration. 

He said: "It is entirely down to Tory cabinet member who weren't prepared to recognise what the issues were in the council and make decisions.

"All the areas of the overspend are the areas that caused the £5m overspend last year and the budget did not reflect those run rates."

But Councillor Steve O'Connell, his opposite number in the Conservative shadow cabinet, said Labour had inherited "a tightly-run financial ship" attributed the forecasted overspend to council schemes implemented since May's election, such as a £200,000 "Fairness Commission" and £500,000 spent on its fly-tipping campaign.

He said: "The first quarter financial report of the new administration suggests that Labour has lost none of its knack for financial incompetence.

"Coun Hall told the scrutiny committee last week that the likely response to this crisis will be to slash jobs, raid reserves and resort to financial gobbledygook that even his own chair of scrutiny has ridiculed."

Coun Hall will unveil the council's 2015/16 budget proposals, including further details of job losses, in December.