Government guidance on how directors of public health and their staff should be employed will extend as far as stating their terms and conditions and how they should be managed, according to ministers.

Health minister Anne Milton has written to the Association of Directors of Public Health reassuring them that recent amendments to the Health and Social Care Bill would “extend the powers of the secretary of state to issue guidance in relation to the employment of the director of public health”.

The letter, dated 1 February, said amendments “would require local authorities to have regard to guidance… as to appointment and termination appointment, terms and conditions and management”.

In addition, the bill has also been amended in response to concerns about other public health specialists to allow the health secretary “to produce guidance to which the local authority must have regard in relation to the employment of professional appraisal process for public health specialists employed by local authorities”.

Nicola Close, chief executive of the Association of Directors of Public Health, said it had lobbied for the protected status described in Ms Milton’s letter to ensure that a director could speak out on public issues on behalf of communities without fearing they would be sacked as a result.

But the news was not welcomed by council chief executives. Brent LBC chief executive Gareth Daniel said: “This will go down like a lead balloon with local authority chief executives.”

The Department of Health has also confirmed that funding for councils new public health responsibilities will in future be distributed according to levels of assessed need, rather than merely historic spending.

Figures published on Tuesday confirmed that councils would receive £2.2bn in 2012-13, an increase of 5.3 per cent on the £2.1bn the department has calculated was spent by primary care trusts on the relevant functions last year.

The individual allocations are based on historic spending data. But a departmental spokeswoman said that from 2013-14, a formula for allocating resources to councils drawn up by the independent Advisory Committee on Resource Allocation and based on the “healthcare needs of the local population” would be used.

Councils had lobbied vigorously for funding to be based on measures of need rather than historic spending. In a letter to Ms Milton last November, the Local Government Association called for a public health grant allocated by need, demography, deprivation and estimated costs of new services. A report to the LGA’s executive last month said Ms Milton had agreed that such an approach was appropriate.

While the increases for 2012-13 levels of funding for each council varied little from the overall 5.3%, spending levels per head showed wide variations.

Lowest is Buckinghamshire at £15, and highest the City of London and Hackney, both on £116. Councils in the north-east averaged £65 per head while those in the east of England, south-east and south-west all averaged £27.

The department said it did “not expect the local authority public health ring-fenced grants to fall in real terms, other than in exceptional circumstances”.