Bradford Council's Labour Group is to make a formal complaint to the Government over the way a £23 million award is to be allocated.
The committee agreed funds from the Neighbourhood Renewal Award should be given on the basis of both need and population, in spite of strong opposition from Labour.
But group leader Councillor Ian Greenwood said he would write to Secretary of State for Local Government Stephen Byers about the system. He said: "I was horrified to see this proposal. This was set up to redress the poorest communities."
Executive member for the economy Councillor Simon Cooke said it replaced an inefficient system where only certain areas had ever qualified for funds. Council leader Councillor Margaret Eaton said not everyone in Ilkley "drives around in a Rolls Royce" and there were pockets of deprivation everywhere.
The committee agreed official criteria should be set up and one of the first projects to benefit is likely to be historic Manningham Mills for preliminary work which would eventually lead to an £18 million restoration scheme.
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