Oxford City Council's financial problems will be eased by its £8m property disposal programme.

The sell-off, which includes the sale of the freehold of Sainsbury's Heyford Hill store to the supermarket chain, thought to be worth millions, means the council will be in credit by April, in time for the start of the new financial year.

The proceeds are being used to repay a budget deficit of £3.4m, fund 75 redundancies at a cost of £2.8m, and put the council in credit by £2m.

Despite this, the council has been forced to agree £6m worth of cuts to services in the coming year, including a £1m reduction in the homelessness budget.

This is because its spending of £29.4m outstripped its income of £23.5m, which included Government grants totalling £15.3m and council tax income incorporating a four per cent rise.

The proceeds from the disposal programme have exceeded expectations.

Extra funds will be used to pay for capital programme projects including property maintenance, new computers, renovation grants and improving leisure facilities.

Property manager Colin Beever told the council's executive board that three deals, worth £6.3m, were being completed this week.

Leader of the council, Cllr Corinna Redman, said: "The property disposal programme has over-achieved, but we won't know to what extent until we get an update at the board meeting on April 23.

"This has put the council back in credit by £2m, it pays for the redundancy programme, and wipes out the budget deficit, so we are in a strong position.

"There is also an ongoing annual saving on the council's wage bill of about £1.5m.

"This programme, together with a new management structure involving business units and a business planning system, have put the council's finances back on track."