Adwick and Carcroft Coun John Mounsey said the news will be good for existing tenants – but bad for future ones.
Rents are set to be reduced from April 4, resulting in an weekly decrease of 71p on average for a social house in Doncaster.
This will continue until the end of the current parliament in 2020 before it is reviewed.
Existing tenants will save around £36.40 a year but concerns have been raised over council house building projects to tackle demand.
Around 8,000 prospective tenants are on the waiting list for a council house in Doncaster, Coun Mounsey said.
Doncaster Council’s cabinet members met yesterday to approve amended plans to future budgets.
Cabinet member for housing, Coun Jane Nightingale, said: “The reduction is a clear benefit in short term and the average rent of £70.57 will remain the cheapest in South Yorkshire.
“But the change will significantly reduce the ability to maintain and improve the council housing stock.”
Coun Mounsey said: “Over the next four years running up to 2020 it will see a £26m loss in funding that we could have for building houses in Doncaster.
“It equates to around 3,000 homes in Doncaster across the borough over the next four to ten years.
“We have a housing shortage. Like most parts of the country, it is nothing new.
“There is about 8,000 people on the waiting list and this reduction in money coming in will not help that situation.
“It’s good for current residents but bad for future ones - it will have a knock on effect.”
Doncaster Council has around 20,000 properties on its portfolio and has to find £109m in savings by 2020.
“I sympathise with the Mayor and others who have to find savings again and again year on year,” Coun Mounsey said.
“We’ll come to another point again and we’ll go, ‘Where will we find the money to save?’
“It’s discrimination in my view, we are getting a rough deal in Doncaster and some councils in the south are getting funding increases. Where is the justice in that?”
The government’s summer budget declared that all social housing rents would be cut by one per cent from 2016 to 2020 across the country.
A Doncaster Council report states that there will now be a projected shortfall of £25.9m that was earmarked mainly for an increase in housing stock.
Coun Mounsey, who sat alongside councillors from a range of political parties who scrutinised the budget, expressed concerns in the social house building plan.
It is calculated that over a 30 year council business plan there will now be a shortfall of £310m for social housing projects.
The news comes on the back of a council tax rise of 3.95 per cent for the 2016/17 financial year, which will come into force in April.
The hike is from the government’s two per cent ‘levy’ on council tax, which was announced by Chancellor George Osborne in his Autumn Statement and is in addition to the 1.95 per cent previously agreed by the Council.
The money raised through the Government’s Council Tax ‘levy’ will have to be spent exclusively on adult social care.