THE Government confirmed last night that a council tax shake-up could see bills for the most expensive homes almost treble to more than £6,000 - so that charges for poorer households can be cut.

But the Office of the Deputy Prime Minister insisted it was only "one option" being considered.

Tomorrow, Local Government Minister Nick Raynsford will publish the Government's long-awaited Balance of Funding Review setting out possible options for change.

Sir Sandy Bruce-Lockhart, the new chairman of the Local Government Association, said the time was approaching when ministers must decide what they would do about the council tax.

"The Prime Minister, in his very eloquent way, is often reminding us that government is about hard choices and difficult decisions," he told BBC Radio 4's The World This Weekend.

"Well, this is not an easy decision but it really is make your mind up time and we would like to see the Government making that final recommendation in the autumn with the new session of Parliament."

A report in The Sunday Telegraph, citing a leaked draft of the review, said that one option was a revamp of the current eight band system which could see bills rocket for the most valuable properties from 2007.

According to the paper, it could see the introduction of one or two more bands at the top end of the scale and another at the bottom end.

Bills for those in lower value homes would fall, but could treble for owners of luxury properties, the paper said.

People with properties worth more than £620,000 at current prices could see bills rocket from £2,334 a year to £6,224 in three years, it reported. Charges for those in the £310,000 to £440,000 bracket could increase from £1,949 to £2,982.

Bills for properties worth between £130,000 and £170,000 would be unchanged, while those in homes under £130,000 would pay less and those in homes over £170,000 would pay more.

This would enable the Government to cut bills for poorer households, by making good the shortfall from those in more expensive homes.

Conservatives called the reported moves a "stealth tax" as soaring house prices have brought the average value of a home in England and Wales to about £196,000, well over the £170,000 mark.

Shadow local government minister Caroline Spelman said: "This will punish pensioners and hard-working families who have lived in their homes a long time, the value of whose homes have risen, but who are on modest incomes and cannot afford even larger tax bills."

However, a spokesman for the Office of The Deputy Prime Minister, which is publishing the review, said: "The report was done specifically to look at options and not conclusions. This story looks at only one option."

Help the Aged said that the current system was "desperately unfair" to people on fixed incomes, such as pensioners.

"If someone's income is fixed but their outgoings continue to rise, they are going to be financially hit and end up going into poverty," said spokeswoman Andrea Lane.

Liberal Democrat local government spokesman Edward Davey said "tinkering" with the current system would not work. "We need to scrap council tax for the US and European system of local income tax," he said.