'Council tax will rise each time you improve your home'

Critics said the plans are a stealth tax designed to exploit soaring house prices, and that revaluing all 21million homes in England every year could cost as much as £5billion.

Council tax is currently charged according to a band system based on the value of properties in 1990 and a house's value is only re-assessed when it changes hands.

Local authorities are already allowed to increase bills every April. But the proposed changes would mean an additional charge would be incurred by double glazing, a new kitchen, bathroom or a garden shed.

Tory local government spokesman Caroline Spelman said: 'There is now irrefutable evidence that the Labour Government is preparing to introduce a new home improvement tax, on top of stamp duty, and a new levy on house prices in every part of the UK.'

Under rules being introduced in Northern Ireland - which could be rolled out - properties will be assessed every year to take improvements-into account.

If the scheme were extended to England, Whitehall's central valuation computer would be connected to local authority planning and building departments.

It could then record major home improvements that need planning permission.

More minor improvements could be monitored either by inspectors knocking on doors or by questionnaires which occupiers would be forced to answer.

The plans for annual revaluations are supported by Sir Michael Lyons, whose review of council tax is expected this Spring.

One London council is preparing to reverse the nationwide rise in bills by cutting its rates for the first time.

Residents in the Tory-run West London borough of Hammersmith and Fulham will see bills drop by three per cent - saving families living in a benchmark band D property £27.52 a year. This would put the charge back to 2004 levels.

Council bosses said the cut was possible because of a £14.5million efficiency drive.