Thousands of householders across Oxfordshire could face huge rises in council tax, after the Government announced homes will be revalued to reflect property price rises.

Land Registry figures show house prices in Oxford have risen by 95 per cent in the last four years to an average of £238,000 -- placing the average city householder in the second highest national council tax band.

Local Government Minister Nick Raynsford said the revaluation, the first since the tax was introduced nine years ago, would be conducted in 2005.

A number of new tax bands could also be created by 2007, including a new premium rate for homes worth more than £1m.

Brian Hodgson, leader of Oxfordshire County Council's Labour group, welcomed the proposals, part of the Local Government Bill.

He has campaigned for years for an increase in the number of council tax bands.

Mr Hodgson said there should be new bands for the cheapest properties, including mobile homes, and the most expensive homes.

He added: "I'm delighted that our persistence has paid off, but I feel that at least one new tax band should be introduced much sooner than 2007.

"The Government should introduce a new band immediately at the bottom end for mobile homes."

Council tax payers in Oxfordshire are already being warned to expect a 17 per cent rise in April, if the county council gets less than it expects in a Government settlement.

A new formula for funding local authorities is expected to favour the Midlands and the North at the expense of the south-east.

In a worst-case scenario, Oxfordshire could be £40m worse off.

This year taxpayers in Oxfordshire faced an increase of almost 10 per cent, but the county's social services was still forced to make £8.9m worth of cuts.

Details of the grant settlement for local authorities are expected in December.

A national revaluation of bands would hit people in Oxfordshire because house prices have risen far higher than elsewhere in the country.

The average house price in Liverpool is £66,882, Nottingham £87,410, Leeds £101,728, Reading £175, 802, Brighton £181,184 and London £280,706.

When the council tax replaced the poll tax in 1993, it was based on 1991 house values.

There are eight bands ranging from band A -- properties valued at £40,000 or less to band H -- properties valued at more than £320,000.

Band D is taken to be the average and includes properties valued from £68,001 to £88,000, but following massive increases in house prices in Oxford, the average house price is equivalent to band G, homes valued between £160,001 and £320,000.

Estate agents Lansborough Estates Ltd in Abingdon criticised the proposal, saying it would be unfair to link tax levels to house prices.

Managing director Adrian Welsh said it would be better to base council tax bands on the number of bedrooms or people in a house.

He said: "In villages like Drayton and Wootton there are two bedroom houses that have over the years been extended into three or four bedroom properties, but have had no change in their council tax band.

"If the bands are purely based on property prices it would be foolish because prices fluctuate so much.

"The size of a property would better reflect the number of people who are using the services being paid for."

The Liberal Democrats have also put forward a series of proposals for council tax reforms.

They have suggested ring-fencing all National Insurance contributions for spending exclusively on the NHS, and ending central government interference by passing power to the regions to raise a local income tax.