Osborne conjures up a two-year council tax freeze for millions

Pledging to curb one of the most unpopular household bills, he claimed there would be no need for any rise for two years under a Tory government.

"I can tell you today that the next Conservative government will freeze your council tax for at least two years," he declared during his speech at the Tory conference in Birmingham. "Every council tax bill of every family in every council that takes part will be frozen."

It would save £70 per household in the first year, rising to £140 in year two.

"Instead of council tax bills that rise year after year under Labour, millions of families will get help at the time they need it most." To prolonged cheers, he added: "Conservatives will not leave people to struggle with the credit crunch alone."

The announcementwas the white rabbit from the shadow chancellor's hat supporters had hoped for, and cemented Mr Osborne's place as the latter-day darling of the Tory conference hall.

Sensing they had a potential hit with voters, the Tories said they would be delivering tens of thousands of leaflets in target seats spelling out the pledge.

Mr Osborne's promise came with a crucial caveat, however, that for people to qualify, their local town halls will first have to tighten their belts and limit their planned rises to a maximum of 2.5 per cent. That figure is slightly below the recent average council tax rise for London of 2.7 per cent and well below the national average for this year of 3.9 per cent. Providing they do so, the Government would give extra funds to wipe out the rise altogether. The cost - £500 million in year one, and a billion pounds in year two - would be raised by cutting Whitehall's spending on advertising campaigns and consultants.

Mr Osborne, in a sombre performance, also attacked Gordon Brown's handling of the economy - and jibed that the Prime Minister was still a "novice" when it came to "listening and leading".

And he delivered a stern lecture to the City that it cannot expect to be bailed out for its own "failings". "If you take risks, then you must bear the cost," he said.

"If you pay yourself sums far beyond what anyone else in any other walk of life does, then be prepared to lose it when you make mistakes."

He issued a 40-page document setting out measures to restore long-term stability. And writing in the Evening Standard, Mr Osborne also announced new regulations to force banks to set aside in periods of prosperity to protect them going bust in downturns.

He said bankers who blundered must expect to be hit in the pocket. "I will not tax the family earning £20,000 to carry on paying the bonuses of the banker earning £2 million pounds," he said. "You helped cause this mess and you can help pay to clear it up."

Although there were "the most profound questions" to be answered about the future of the financial sector, Mr Osborne insisted that the Tories would champion the City of London. "We want the City to succeed," he said.

"We recognise the investment you bring, the prosperity you have created, the thousands of jobs that depend on you... not only in hedge funds in Mayfair, but bank branches in Mansfield and call centres in Manchester."

Earlier, the Conservatives came under Labour fire for pocketing donations from hedge fund speculators blamed for short-selling banking shares.

The gifts included £650,000 from Michael Hintze of CQS and more than £200,000 from Paul Ruddock of Lansdowne Partners - both firms that reportedly profited by betting that Bradford & Bingley would fall.

But Mr Osborne insisted: "No Tory Party donor buys influence with the Conservative Party in the same way trade unions do with the Labour Party." Later explaining the details on council tax, Mr Osborne said he believed that every council would strive to meet the ceiling. Since 1997 council tax in England has more than doubled, from £688 for a band D home to £1,374.

Labour claimed that the Tory council tax plan did not add up. It said that government advertising for health campaigns, such as cervical cancer and drink-drive campaigns, would have to be cut to scrape the money together.