Council taxpayers in the North-East will face higher bills than anywhere else in the country, Government figures revealed yesterday.

The average bill for a Band D home in this region is £1,280, compared to £1,162 in London, the cheapest area of the country.

Council bosses put the high prices down to the high number of homes in the lower bands in this region.

Here, 86pc of homes fall in bands A to C, meaning any spending above the funding level coming from Government puts a greater burden on taxpayers.

That compares to London, where just 43pc of homes are in that bracket.

Last night, local government leaders from the North-East said they will use the figures to press for a fairer deal when the council tax system is reformed through the Lyons Review.

Bob Gibson, chairman of the Association of North-East Councils, said: "The Government's additional funding has been very welcome but the longer-term funding arrangements need to be addressed.

"Authorities in this region have very specific issues to face, including dealing with the impact of deprivation, and we need a longer-term solution which takes these issues into account and reduces the pressure on council tax payers."

Newcastle City Council leader Peter Arnold said: "For me it points to the stupidity of the council tax system, which is based on property values but takes no account of the circumstances of the people who live in the property.

"Next year we're facing a major revaluation of house prices which will lead to people being allocated to higher bands. In Wales, that has led to significant increases in the amount of tax being levied."

North Tyneside Mayor Linda Arkley said: "The upshot is that we need more funding and this is one of the issues we've been discussing.

"The formula they've used year in, year out has gone against us."

But the Office of the Deputy Prime Minister said the issue is more complex than the figures suggest, with variations within regions.

A spokesman said: "We will consider what the Lyons Review has to say before deciding on the way forward."

However, Local Government Minister Nick Raynsford announced no councils in the North-East would be "capped" this year, after all heeded the Government's warning to keep increases below 5pc.

The average rise in the region was 4.1pc.

Meanwhile, Deputy Prime Minister John Prescott yesterday defended Chancellor Gordon Brown's decision to give a £200 council rebate for pensioners only for one year.

Standing in for Tony Blair, who was at an EU summit in Brussels, he said: "It will be for one year because we are reviewing council tax."