Council tax reform will be the subject of a second review, after a 15 month study concluded that more work is needed on the options.

While the balance of funding review published yesterday argued that the tax should be retained, Sir Michael Lyons will now look into the "detailed case" for reform.

Speaking to the FT, local government minister Nick Raynsford insisted that the new study would look at "a sustainable fair system of local government finance in the future which gives local authorities the ability to take decisions and stand and fall by them".

But opposition parties accused the government of ducking the issue, as a report is not expected before the next general election.