The authority picked up the accolade at the Local Government Chronicle awards ceremony in London last night.
Reductions in litter, fly-posting and graffiti, a drop in the level of crime and improvements in education were cited as some of the reasons for the award.
City council leader Carl Minns said: "We won't rest on our laurels.
"We are ambitious and will continue to focus on delivering the best for residents – and even more improvements in the coming year."