One billion pounds will go directly to local authorities across England between over seven years, with more than half of the sum earmarked for communities in the north.
Shadow chancellor John McDonnell claimed it was a "desperate bribe", while the Stoke Central MP Gareth Snell - whose constituency voted heavily for Brexit - said it was “less than the total value of cuts faced by Stoke-on-Trent City Council alone over the same period”.
The announcement also sparked a row over whether the money would bypass the Scottish Government, in a possible break with devolved funding arrangements under the Barnett Formula.
Local government spending in England would normally produce a windfall for devolved governments under the Barnett formula, calculated based on their share of UK population.
However, Downing Street and the Scotland Office did not confirm whether any Barnett Formula funding would be handed to the government in Edinburgh, saying the issue would be addressed in the Chancellor’s spring statement on 13 March.
“In relation to devolved administrations, you can expect more detail to be set out around the time of the spending review,” the Prime Minister’s official spokesman said. He insisted the funding was “not conditional” on votes for the Brexit deal.
The Scotsman revealed in October how Scottish Tories were lobbying for more UK Government funding to be passed directly from Whitehall to local authorities in devolved nations, bypassing the Scottish Government.
One proposal to achieve this is to use a new UK Shared Prosperity Fund, which after Brexit will replace multi-billion pound EU investment funds currently administered by devolved governments, to distribute cash directly to local authorities and groups.
A Conservative source told the Scotsman last week that the Tories were seeking to “cut out the middleman” - the Scottish Government.
The Prime Minister’s spokesman said a consultation on the Shared Prosperity Fund, which is already two months late, would be published “shortly”.
SNP deputy Westminster leader Kirsty Blackman MP accused the Prime Minister of handing a Brexit “bung” to MPs.
"This is pork barrel politics at its worst. Labour MPs must not be bought off by giving support to a damaging Tory Brexit deal, which we know would be devastating for jobs, living standards and the economy.
"The UK government must explain why it has failed to include any mention of additional funding to Scotland, and Barnett consequentials, in this announcement.
Scotland must get its fair share and not lose out like we did in the Tories' last £1bn Brexit bung to the DUP, when Scottish Secretary David Mundell failed to secure a single penny for Scotland.”