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The government is to appoint a commissioner to take over a Tory-run unitary council due to its level of financial risk and debt.
Rob Gledhill, leader of Thurrock Council in Essex, has resigned, saying "the political buck stops with me".
A senior local government source said Essex County Council would lead the intervention and inspection and sign off the "big decisions".
Local Government Secretary Greg Clark said the intervention was "necessary".
"I strongly believe that when a council gets into difficulties, its local government neighbours should be the preferred source of help in turning it around," he said.
"I know that Essex County Council possesses the expertise and ability to help."
The BBC understands there are serious concerns about the level of financial risk and debt the authority has incurred.
Thurrock has borrowed about £1bn and invested hundreds of millions of pounds largely in solar energy.
Concerns have been raised about the level of debt the authority has, payments the council has to make servicing the debt, and the income it receives.
Mr Gledhill said: "Whilst I welcome this news and the support from Her Majesty's Government it has become clear over the past few months that the situation regarding council investments, and subsequently its finances, has not been as reported.
"As leader of the council, the political buck stops with me and as such it would only be right, and expected, that I resign as leader of the council."
Members of the county council's finance team will sit alongside Thurrock's.
The intervention is expected to start next week.
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