Gordon Brown has announced a major review of the roles of the Inland Revenue and Customs and Excise that could see the two revenue collection bodies merging.

The surprise move follows a series of critical newspaper and audit reports that have prompted concern about the effectiveness of the agencies.

Most recently, the Inland Revenue has been criticised by MPs for agreeing a property deal with a company based in a tax haven.

Meanwhile, Customs and Excise has also come under fire following a series of high profile court case collapses involving the loss of over £100 million in revenue from scams involving excise duty fraud.

Glossing over the failures, the Treasury said the two organisations had played a key role in supporting the government's reforming agenda.

"The primary focus of the review will be making public service delivery more effective and efficient. It will be conducted in discussion with unions and other stakeholders," the chancellor said.

But shadow chancellor Michael Howard said the review was "an admission that the Inland Revenue and Customs and Excise are in chaos".

The review appears set to give the Treasury sole responsibility for tax policy advice to ministers, leaving the two agencies to focus on revenue collection. The move has prompted concern over the concentration of power over tax policy in the hands of 11 Downing Street.