Fife Council tenants will see rents rise by 5% from April.
The move was agreed as councillors set the local authority budget for 2024-25.
Service charges and rents for lock-ups, garages and temporary accommodation will also increase by the same amount.
Labour’s housing spokesperson Judy Hamilton said any increase in the current financial climate was difficult.
But she described it as essential to support Fife’s under-pressure housing services.
The rise follows consultation with tenants, who were given the choice of a 5%, 6% or 7% increase.
And it follows an attempt by the SNP opposition group to restrict it to 4% given the ongoing cost-of-living crisis.
Ms Hamilton said: “We are on the brink of a housing emergency here in Fife and the rent increase we are introducing is lower than most other councils are implementing.”
Fife facing ‘significant housing pressures’
The agreement means the average weekly rent will rise by £4.10 to £86.53.
And Ms Hamilton said it would enable to council to pay for home improvements, relieve fuel poverty and build new council houses.
“Three-quarters of the rental income will be invested back into housing stock,” she added.
The Kirkcaldy councillor warned Fife still faces significant housing pressures.
And she continued: “We all know the real solution is to build more houses.
“However, the proposed reduction of the Scottish Government subsidy of 26% places our building programme at risk.”
Fife Council has written to the Scottish and UK governments asking for support to help them avoid a housing emergency.
Fife Council helping to house refugees
Meanwhile, Fife has accepted one of Scotland’s largest cohorts of Ukrainian refugees, most of whom are in sponsored or host accommodation.
However, the council still supports those living in shared accommodation such as hotels.
And it is anticipated around a quarter will require some kind of housing or homelessness support.
Fife Council will also support 33 families from Afghanistan this year, who will live in MOD accommodation in Leuchars and Rosyth.
Ms Hamilton added: “I’m proud to be one of the communities that has welcomed them with open arms.”
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