The plan is part of a 2015 national budget that aims to strengthen Spain's recovery after it emerged from recession in mid-2013 and prevent further financial turbulence.
At the height of the crisis in 2012, schools and hospitals in some regions struggled to pay their heating bills as providers who had not been paid cut off services.
Several of Spain's regions turned to an emergency credit line set up by the national government to stabilise their public finances.
Many local authorities that rely on the regional governments for financing, however, complain that funding still has not trickled down to help them settle their debts.
As part of the ongoing credit line therefore, in 2015 "there will be a share, a billion euros at most" to help the regions settle debts on behalf of the local authorities, a source in the Treasury told AFP.
This will "provide loans for the regions to pay the local authorities for social, education and health services" for which they owe money to providers.
Budget Minister Cristobal Montoro said last week it was necessary "to guarantee funding of the welfare state" in places where local authorities are still in debt for essential services.
Montoro made those comments when outlining the plan on Friday, ahead of municipal elections due in May 2015.