Stockton Borough Councillors have agreed a four per cent overall reduction on their allowances budget.
They took the decision at a full meeting of the Council last night after considering the recommendations of an independent panel appointed to review the current allowances system.
In all, the reductions could save the Council £34,000 a year.
Under the scheme, special responsibility allowances paid to the Council Leader and Deputy Leader, Cabinet Members, the Chairs and Vice Chairs of various committees and leaders of each political group will be reduced, with the basic allowance paid to councillors frozen.
Allowances paid to the Mayor and Deputy Mayor will also reduce by four per cent.
Councillors also agreed to keep any future increases in allowances in line with pay increases to Council employees, which have been frozen for the past two years and are likely to remain so for 2012/13.
Stockton Council Leader, Councillor Bob Cook, said: "Councillors work extremely hard for their communities but, at a time when we are examining all our budgets to achieve £26.5 million of savings and with our staff pay frozen, I believe it is right for us to look at our own remuneration.
"As far as I am aware, we are the first Council in the region to cut our members' allowances.
"We have listened to the recommendations of an independent panel and taken on board many of their ideas and principles but this move goes a step further."