The Mayor's new planning adviser will not be paid a salary following a row over the legality of his appointment, it emerged today.

Sir Simon Milton, who is leader of Westminster City Council, came under fire from Labour after the Standard revealed today that there was a legal "grey area" surrounding his status.

Within hours of our story, City Hall announced that he would not receive a penny from the taxpayer because he was also a sitting councillor.

The law forbids serving councillors from being employed in senior posts in local government, including the Mayor's 12 personal staff.

Sir Simon faced criticism because it appeared that he would be hired as a consultant to get around the law.

It is understood that lawyers in City Hall were scrambling to draft a contract for him that would not be open to judicial review.

A spokesman for the Greater London Authority said: "Sir Simon Milton's role is that of an unpaid adviser to the Mayor. He will provide informed advice on planning as and when required to enable the Mayor to immediately get on with the job of leading London."

Sir Simon is due to step aside as Westminster leader next month, but wants to remain as a councillor and keep his post as chairman of the Local Government Association.

New Deputy Mayor for government relations, Ian Clement, decided to step down immediately as a councillor in Bexley before taking up his new post.

Labour group leader Len Duvall wrote this week to GLA chief executive Anthony Mayer to clarify the legality of all the Mayor's recent appointments.

He said: "They have been caught out and I'm glad that common sense has prevailed. The taxpayer of London has just been saved possibly more than £100,000 in consultancy fees that could have gone to Sir Simon."

There are still question-marks surrounding the status of Kit Malthouse, the new Deputy Mayor for policing. He is an Assembly member and a member of the Mayor's executive team, an unprecedented situation at City Hall.

Local government expert Tony Travers, director of the London Group at the London School of Economics, said there was little clarity over some of the appointments. He said: "The fact is that the law as it stands does not cover the current situation, where the Mayor wants to hire a councillor as a consultant and appoint as an executive a member of the Assembly."

The Greater London Authority Act 1999, which was amended last year, only allows the Mayor to directly appoint 12 people to his staff.

All of these are politically restricted posts and therefore cannot be taken up by sitting councillors. Section 67 of the Act states he can hire two political advisers. A further 10 staff can be hired but they have to be on merit and an independent person sits in on their interview.

The act makes clear that any other staff would have to be hired by the chief executive of the GLA, not the Mayor. The law is vague and City Hall lawyers will need to tread carefully in ensuring by what authority each appointment is made.

A spokesman for Boris Johnson dismissed any suggestion that the Mayor had broken his manifesto pledge on transparency.

"All legal requirements have been followed with our appointments. However, with some of the appointments, such as the senior planning adviser, the law essentially doesn't capture some of those roles," he said.

"This is a grey area and we are trying to come up with new protocols."

He added that the salaries and details of terms and conditions will be made available to the London Assembly "in the near future", probably early next week.

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