UP to half of North-East homes would enjoy lower council tax bills under a shake-up of town hall finance to be proposed today.

Their bills would fall because their homes would be placed in a new band for the cheapest properties, a move to be recommended in a report to Chancellor Gordon Brown.

However, the gain could be many years away because the government - fearing the anger from bills rising sharply in the South - has shelved the change until after the next election.

The creation of two extra council tax bands, one at each end of the house price spectrum, is expected to be recommended in a long-awaited report by Sir Michael Lyons.

The revaluation of all properties that would accompany the change has sparked nervousness in the South, where booming house prices mean many would face higher bills.

But the huge benefit to the North-East of adding extra bands was revealed in modelling carried out for Sir Michael's interim report, published 15 months ago.

Across the region, 49 per cent of homes would move down to the new lower band, while only 13 per cent would move up to the fresh upper band, it found.

The picture was similar in Yorkshire and The Humber, with 47 per cent of homes emerging as winners and only 12 per cent as losers.

In sharp contrast, 40 per cent of London homes would lose out and only 12 per cent would gain.

The proportions would undoubtedly change when all homes are revalued, but the broad thrust of Sir Michael's conclusions are likely to remain.

Local authorities across the North would also probably require extra government funding to avoid increasing all council tax bills to compensate for homeowners dropping one band.

Separate figures released this week suggest few North-Easterners would be hit by the new top band, expected to be levied on homes worth about £1m.

Between 2001 and last year, only 14 homes across County Durham and Tees Valley were sold for £1m or more, with a further 59 in North Yorkshire.

The Lyons review is also expected to urge that people entitled to council tax benefit should gain it automatically, instead of having to claim it.

And a "bed tax" on hotels and bed-and-breakfasts is likely to be recommended as an extra source of local authority income, although it would be up to councils whether to adopt it.

A spokeswoman for the Lyons inquiry said the suggestions were speculation, ahead of the report's publication today.

A revised council tax, with ten instead of eight bands, was first suggested by Prime Minister Tony Blair as the most likely reform accompanying revaluation as long ago as summer 2004.

But, a year later, the government shelved revaluation - and possible extra bands - until at least 2010, amid fears of revolt in London and the South.