HOUSEHOLDERS in the region could be big winners if plans to reform the council tax are pushed through.

Mounting resentment at soaring bills has forced ministers to examine other options to the charge - such as local income tax and a new system of business rates.

Another of the changes being considered is a scrapping of the eight nationally-set council tax bands and a replacement scheme where bands are set regionally to reflect local property values.

Owners of expensive homes would pay more under a new top-rate band, while householders in poorer parts of the country - such as the North-East - would pay less if a lower band was introduced.

Details of the overhaul will be announced in the summer, following a review set up by the Office of the Deputy Prime Minister.

Local Government Minister Nick Raynsford said there were problems and unfairness in the current system, but warned against looking for a quick fix.

"As the sad history of bodged reform such as the poll tax tells us, it is very dangerous in this complex field to seek over-simplistic solutions and promise painless reform," he said.

Paul Woods, the treasurer of the Association of North-East Councils, said: "All the options need to be looked at in quite a lot of detail to see what the advantages and disadvantages are.

"We have been arguing for many years for a revaluation of council tax because it is out of date and the Government has agreed to produce a new list from 2007.

"There are options about extending the number of bands to make it fairer, and clearly we would be delighted if that was going to happen."

Regional setting of council tax bands would allow authorities to spread the burden of payment more equally in their areas.

The changes may also make council tax more related to income, with automatic application for discounts for people receiving a range of means-tested state benefits.

Dari Taylor, MP for Stockton South, said the council tax was badly in need of reform and called for the Government to consider a combination of taxes on property and income.

She said: "Reform is appropriate because many people living in similar properties - but in adjoining local authorities - pay very different amounts in council tax.

"In particular, pensioners on fixed incomes would be helped if the tax also took into account the income they receive. A combination of local income tax and council tax with a regional element could achieve that."