Despite a £3 million inquiry lasting four years, the Government has quietly dropped plans to replace council tax with a fairer system.

Government sources have revealed that ministers will never release a response to the report of former council chief Sir Michael Lyons - who headed a review set up in 2003 amid mounting anger at double-digit rises in council tax bills. Liberal Democrat shadow chief secretary to the treasury Julia Goldsworthy MP says:

"This is the final confirmation that the Lyons Report has been kicked so far into the long grass that it will never result in anything. The report concluded that council tax was not fit for purpose and had some fairly modest proposals to tackle some of the unfairness. But it now seems even this was too much for ministers.

The Liberal Democrats will scrap the unpopular council tax, and replace it with a tax raised and spent locally that is linked to people's ability to pay."