The country's biggest local authority will pay £757 million to settle a long-running equal pay case, which it warned would impact on resources available to deliver services.
Birmingham City Council said it shared concerns from its auditor about the increase in equal pay claims against the authority.
The cost of claims dating back to 2006 will be £757 million, but the council said this could increase further if more claims are received.
"The affordability of this presents a major challenge to the council," the authority said in a statement.
A group of more than 150 women workers, including cooks, cleaners and care staff, recently won an equal pay case against the council.