The card was not intended to be insulting, the
"Insulting" Christmas cards warning "Don't overindulge this Christmas. Pay your rent!", have been sent out to west London council tenants.
The card shows a pound coin fizzing in a glass.
Hammersmith and Fulham Council said 46% of its tenants were in rent arrears and the cards were part of a "hard-hitting" campaign.
However, tenants branded it as a "disgusting" move disguised as a festive message.
Mary Buckley and her daughter Tina, have lived in their council property for 25 years and said they have never been behind with their rent.
Tina Buckley told BBC London 94.9: "What's made me so angry is my mum's been a tenant for 60 years.
"She's never been behind with her rent and when we were young and there wasn't much money she'd pay her rent before she'd feed us and clothe us and heat the house.
"Keeping the roof over our head was more important than anything else so to get this disgusting, threatening piece of literature masquerading as a Christmas greeting, it's insulting."
She says she wants a printed apology in the council's magazine.
Her mother said: "I'm absolutely mad over it."
Councillor Johnson, cabinet member for housing, said it was part of an ongoing campaign.
He said: "We want to do everything we can to stop tenants getting into rent arrears."
He said the message was "deliberately hard-hitting" but not intended to be insulting.
He added: "It's a very serious issue and the real issue of this double-sided postcard was to say if you are in difficulty give us a call.
"It would give me no pleasure to evict people in the new year because they're behind on their rent."
He said that eviction proceedings begin when a tenant is £250 in arrears.
He said he believed the card, which was sent to about 17,000 properties, cost about £2,000 to produce, which "pales into insignificance" against the rent owed.
He added: "I think we've got to take all reasonable steps possible to make sure people pay their rent."