Wolverhampton Council's Labour leader Ian Brookfield said he was "disappointed" that the city's award from the Towns Fund had been "significantly short" of the £48 million bid for.
City Conservative MP Jane Stevenson said the response was "disingenuous" and that claims over the amount of funding given to the city were "inaccurate".
She said Wolverhampton had received new Government funding of more than £67m, while the opening of a new Ministry of Housing, Communities and Local Government (MHCLG) headquarters would further boost the local economy.
Mr Brookfield has hit back, saying MPs in the city had "failed" to get as much funding as other parts of the region.
In this week's Budget Wolverhampton was one of four Black Country areas to receive £25m from the Towns Fund, which aims to help struggling areas to recover from the pandemic.
The others were Rowley Regis (£19m), Smethwick (£23.5m) and West Bromwich (£25m).
Wolverhampton North East MP Ms Stevenson said: "I am so disappointed by the disingenuous response by Labour councillors to huge investment in our city.
"I know there are elections coming, but for the council to say we are £23m short and only being given half a bid just isn't accurate.
"£17m of our £48m bid was for the National Brownfield Institute (NBI). Since the bid was put together we have received Government funding of £15m for the NBI and an extra £1m in accelerated funding for Towns Fund.
"This is in addition to today's £25m. I don't know what calculator they are using, but I make that £41m.
"We have also received a Budget announcement of another £10m of extra investment coming into our city to research modern methods of construction.
"This money will fund a taskforce based at the new MHCLG base in Wolverhampton.
"So much good news for Wolverhampton and with the Future High Streets fund (£16m), this adds up to £67m of recent direct Government investment.
"That's before the MHCLG relocation and boost that will bring to our local economy.
"All this Government investment, and at such a difficult time for the economy, is surely to be celebrated as a huge win for our city.
"I cannot believe the miserable, mealy-mouthed response from our council."
In response to Ms Stevenson, Mr Brookfield said MPs in the city had "failed" to get as much cash as Sandwell, which had received more than £60m from the fund.
"We welcome all funding, but of course we are disappointed," he said. "We were encouraged by MPs to go bold and we had the 'thumbs up' signs all the way along.
"I have to ask, how is it that Wolverhampton was only allowed one bid, yet Sandwell had three bids? They got £68m. We got roughly the same amount as Rowley Regis did, and they've only got 50,000 people.
"I'll do whatever I can to get money for my city, but people can't tell me that I can't be disappointed that we didn't get what we worked really hard for."