David Cameron has rejected claims the Government has deliberately neglected Liverpool, slashing funding to the city by more than half.
The Prime Minister said the city still received significantly more than the average for English local authorities and he hit out at its Labour mayor, Joe Anderson, accusing him of "talking down" the level of support it received.
His comments drew an angry response from Mr Anderson who branded them "ignorant" and "obscene".
In an interview with the local radio station, City Talk, Mr Cameron dismissed claims by the mayor that Liverpool was facing a cut of 56% in its funding from central government over five years under the coalition.
He said that the 1.3% reduction in its grant this year was in line with the average for English local authorities.
"Liverpool has a higher degree of need than other councils so should get more money but when I compare what Liverpool gets per household - it's £2,995 spending every year by the council - that is a full £500 more than the average for English local authorities," he said.
"It is right that Liverpool should get more but it does get more and it will continue to get more because of its special needs."
He dismissed suggestions that Liverpool now found it easier to get funding from the Chinese government than from Whitehall.
"I think we have got a problem when Joe Anderson just does so much to try and just play politics with these issues. The taxpayer, the Government, puts a lot of money into Liverpool City Council," he said.
"I don't think Joe does his city any favours by just endlessly talking down the money that Liverpool gets. Yes, we want Chinese investment and I'll help Joe to get that Chinese investment but I don't think he helps himself by endlessly saying that somehow the rest of the country isn't supporting Liverpool."
Mr Anderson angrily dismissed his remarks, saying it was "nonsense" to suggest that he would deliberately cut services for political gain.
"He is ignorant and playing politics," he told the radio station.
"The very idea that I was elected or put myself forward for election as mayor of the city to get elected and then cut services for the people who elected me is obscene.
"I will take no lectures from the Prime Minister about me promoting this city. I don't think you will find anybody who is as passionate an ambassador as me for the city of Liverpool."