THE region's council tenants help pay the bill for London's crumbling housing stock under unfair funding rules that must be scrapped, a report says.

The independent Audit Commission attacked a complex cross-subsidy system for penalising local authorities that have successful housing departments.

Under the system, 82 per cent of authorities pay £630m a year into a central pot, which is then distributed to the minority of councils that are struggling to meet the cost of their housing.

The biggest contributors in the North-East are council tenants in Berwick-upon-Tweed, Northumberland, who pay £22 per week for each property.

But tenants in Chester-le-Street (£9), Sedgefield (£8), Teesdale (£7) and Derwent-side (£5), all County Dur-ham, Stockton (£6), Durham (£5), Darlington (£4) and South Tyneside (£4) also pay out.

In North Yorkshire, York (£13), Richmondshire (£12) and Harrogate (£11) are also losers, according to the commission's figures.

Meanwhile, Brent, in north London, receives a £44 weekly subsidy for each of its properties, mainly because of its huge maintenance bill.

Other London authorities that are bailed out by the rest of the country include Hackney (£43), Tower Hamlets (£39), Islington (£35), Southwark (£28) and Camden (£26).

The only North-East authority that benefits from the cross-subsidy is Newcastle, which receives £7 per week for each of its properties.

The commission said the system, which was introduced 17 years ago, denied "high-performing councils the freedom and flexibility to run their own housing services".

Councils that have crumbling housing stock should receive extra attention, but not by forcing those authorities who are doing well to pay into the pot.

James Strachan, the commission's chairman, said: "We recommend that Government should consider allowing those councils that can finance themselves to do just that."

The watchdog said the system needed to be overhauled urgently because of an estimated £19bn backlog of repairs and maintenance across the country.

The Office of the Deputy Prime Minister said the issues in the report deserved debate, but insisted that there was no reason why the present scheme should not continue.