Theresa May faced claims that the British Government offered a "sweetheart deal" to a Tory-led council in order to scrap an embarrassing 15% tax hike.
Jeremy Corbyn confronted the British Prime Minister with a series of leaked text messages from Surrey County Council's leader which, he suggested, revealed negotiations on funding with Whitehall in order to "kill" the double-digit tax rise to pay for social care.
Surrey chief David Hodge insisted there had been no deal with the Government but said he was confident that ministers now understood the "real pressures" facing councils over social care, while Mrs May accused Labour of using "alternative facts".
A 15% rise would have triggered a referendum in Surrey, but Mr Hodge backed down on Tuesday and the council's bills will now go up by 4.99% instead - below the threshold requiring a public vote.
The proposal was politically sensitive for the Government because senior Tories including Chancellor Philip Hammond and Health Secretary Jeremy Hunt have constituencies in Surrey.
At Prime Minister's Questions, Mr Corbyn produced a series of text messages from Mr Hodge which Labour believe to have been intended for Nick King, a special adviser to Communities and Local Government Secretary Sajid Javid.
One message said: "I am advised that DCLG (Department for Communities and Local Government) officials and my director of finance/CE have been working on a solution and that you would be contacting me to agree an MOU (memorandum of understanding."
A second text message read: "The numbers you indicated are the numbers I understand are acceptable for me to accept and call off the R" - an apparent reference to the referendum.
The message ended with Mr Hodge saying "really want to kill this off".
The texts were sent on February 3, four days before the 15% tax hike was abandoned.
The Labour leader challenged the Prime Minister: "So how much did the Government offer Surrey to kill this off and is the same sweetheart deal on offer to every council facing the social care crisis created by (Mrs May's) Government?"
Mrs May stressed that all councils with responsibility for social care had the ability to raise council tax by an extra 3%.
She said of Mr Corbyn: "He comes to the despatch box making all sorts of claims. Yet again what we get from Labour is alternative facts; what they really need is an alternative leader."
A Downing Street spokesman said: "I'm not going to comment on leaked text messages, but I can assure you there is no sweetheart deal."
And Mr Hodge insisted: "Surrey's decision not to proceed with a 15% council tax increase was ours alone and there has been no deal between Surrey County Council and the Government.
"However, I am confident that the Government now understands the real pressures in adult social care and the need for a lasting solution."
Here are the leaked text messages Jeremy Corbyn used to accuse the Government of offering a deal on social care funding to Surrey County Council.
Labour said the messages were understood to be intended for Nick King, a special adviser to Communities and Local Government Secretary Sajid Javid - a claim denied by No 10.
:: Text from Surrey County Council leader David Hodge
Nick, I understand you would like to chat this afternoon, grateful if we could speak asap this afternoon, about the way forward. David Hodge
Hi David - I haven't specifically asked to speak to you, though it's always a pleasure! Is this something the LGA is trying to set up between us? If so, I'm unaware of the issue. Thanks, Nick
:: Text from Mr Hodge
I am advised that DCLG officials and my Director of Finance/CE have been working on a solution and that you would be contacting me to agree an MOU
Do you know what it's about? Sorry I'm being clueless here
:: Text from Mr Hodge
I also have been advised that Chief Sec at Treasury is looking at the proposals now, are you in the picture?
I am being chased to appear on Sunday TV which are avoiding where possible to avoid any confusion over the work being done in the last days to resolve SCC budge position,
:: Text from Mr Hodge
I have received clarification from my CE who confirms Matthew Styles and Sheila Little have just spoken and the numbers you indicated are the numbers that I understand are acceptable for me to accept and call off the R........
If it is possible for that infor to be sent to Sheila Little or myself, I can then revert back soonest,
Really want to kill this off,