The Scottish Budget has been approved after Finance Secretary Derek Mackay won the backing of Green MSPs by providing more cash for local services and holding out the promise that council tax could be scrapped in the next Parliament.

While council tax will remain in place at present, the deal also means local authorities will be able to raise charges this year by 4.79% – potentially adding an additional £47 million to their coffers.

Scottish ministers will also legislate to allow local authorities to introduce a tourist tax on hotel stays, and will back changes that will let councils bring in a workplace parking levy, with NHS buildings exempt.

Mr Mackay and Scottish Green co-convener Patrick Harvie announced the deal had been struck just minutes before MSPs at Holyrood were due to start debating the Budget plans for 2019-20.

Agreement was reached after 48 hours of intensive talks between the two parties, averting the prospect of the Budget being voted down and potentially sparking a snap Holyrood election.

The minority SNP Government needs to win the backing of at least one other party for its budget to pass, and this is the third year in a row the Greens have struck a deal with the Finance Secretary.

Mr Mackay hailed the package of measures – which were approved in principle at Holyrood by 67 votes to 58 – as a “substantial devolution of power to local government”.

He said: “The Scottish Government has continued to ensure our partners in local government receive a fair funding settlement despite further cuts to the Scottish budget from the UK Government.

“These additional measures will deliver the most significant empowerment of local authorities since devolution and provide additional funding to support local services.

“This enhanced package offers up to £187 million of increased funding and flexibility to councils, on top of the £11.1 billion local government settlement. In total overall spending power for local authorities next year will be £620 million higher than it is currently.”

Mr Harvie said his party had wanted to use the Budget process “to achieve meaningful change”.

He said: “The package of local tax reform measures we’ve seen announced today will make real progress.

“We have for the first time a clear, definitive timescale for publishing legislation to abolish and replace council tax during this session of Parliament.”

As part of the deal, the Scottish Government will hold cross-party talks on a replacement council tax system – with the possibility of legislation being published before the end of this Holyrood term if agreement can be reached.

This could then be taken forward after the May 2021 election, Mr Mackay said.

Other measures will see the charges for plastic bags in shops increased from a minimum of 5p to 10p, while ministers also gave their backing in principle for the introduction of a charge for disposable drinks cups.

Alison Evison, president of the local government body Cosla, said the Budget deal “doesn’t mitigate all of our funding issues” and “challenges still remain” for councils.

But she added: “We are now in a better place than we were with the original Budget proposal.

“I welcome the commitment today to the introduction of discretionary taxation (tourist tax) and the workplace parking levy – it is right that local authorities across Scotland should be able to raise revenue locally to address local issues.”

But opposition politicians condemned the Greens for doing a deal with the Scottish Government.

Tory finance spokesman Murdo Fraser branded Mr Harvie and his MSPs “anti-growth” and “anti-business”.

As a result, he claimed: “Instead of reducing the tax burden, they’re going to put it up. And the consequence will be the Scottish economy will continue to under-perform and will have yet more taxes for hard working families. That is not a direction that we can support.”

Scottish Liberal Democrat leader Willie Rennie said: “The Greens have accepted a Budget that fails to scrap the council tax and delivers a cut of £50 million for social care.

“This limp and underwhelming Budget fails to deliver on mental health, education and local government finance.”

Labour finance spokesman James Kelly said: “The only thing the SNP-Green stitch-up will deliver is cuts. Tax cuts for high earners, funding cuts for councils and budget cuts for colleges and universities.”

Mr Kelly insisted the proposals would “do nothing to help councils in the coming financial year, who face a £230.7 million cut to funding”.

He added: “This Budget will lead to a tax cut to people on incomes up to £124,000. The richest could have paid more but the rest will suffer as a result.”