But it has acknowledged "inherent problems" producing figures at a national level for per-capita spending.
It comes after MPs said the government must do more to ensure a fairer deal for countryside communities and businesses.
Responding to the report, the government said it rejected the suggestion that the current system of calculating the local government finance settlement was unfair to rural areas.
Statistics suggesting that predominantly rural local authorities received 50% less government formula grant per head were misleading, it added.
The response said: "Producing figures at a national level for per-capita spending is inherently problematic due to the multi-tier nature of English local government."
Some districts within a rural county were predominantly urban, it added. This included cities such as Norwich in the rural county of Norfolk.
DEFRA's Rural Communities Policy Unit had worked closely with the Department for Communities and Local Government (DCLG) in developing and examining the evidence for rural premiums across local government services.
As a result the government was making adjustments to its funding formula to ensure that funding per head of population is reducing less in predominantly rural authorities than in their urban counterparts in all classes of authority.
"In developing its proposals, the government have been conscious of local authorities' need for stability in the transition to the new scheme," said the government.
The use of floor damping in the transition to business rates retention is a key part of delivering that, it added.
"The government is keen to protect those authorities that are most dependent on central government funding.
"As such, under the settlement, the most dependent area s will see the smallest reductions."
In addition, the government was providing an extra £8.5 million in 2013–14 to support rural authorities in securing efficiencies in services to sparse populations.
The Rural Services Network, which is campaigning for a fairer deal for rural local authorities, said it stood by statistics highlighting the disparity in funding between rural and urban areas.
The network said it would continue to campaign for a fairer local government funding settlement, including in meetings with government ministers.