A controversial council tax revaluation expected to cost Sussex householders hundreds of pounds a year has been postponed.

The Government announced yesterday that the shake-up, planned for 2007, would not be held until after the next General Election.

The decision will be a relief to many householders in the South-East who expected to be moved up a band but the Tories warned that ministers had merely put off dealing with the difficult issue.

A review of local government funding by Sir Michael Lyons has been extended to look into the structures of councils.

Sir Michael, whose inquiry was initially set up in July last year, is expected to explore plans to merge county and district councils into single-tier authorities.

Local government minister David Miliband said the review had therefore been given longer to report and that the revaluation would not happen in the present Parliament.

Mr Miliband said: "We need a clear and complete picture of what we want local government to do before we tackle how it will be funded.

"Sir Michael agrees with this principle.

"That's why we are extending his remit to look at this wider picture.

"In addition to his existing remit, he will now review the current and emerging role of local government and produce a series of documents ending with his final report at the end of next year.

"We have decided to postpone revaluation until 2007 so it can take full account of Sir Michael's further work.

"We do not believe that revaluation will take place in this Parliament."

The next General Election is not expected before 2009.

Sir Michael said: "One of the strongest conclusions emerging from my work to date is that well-founded recommendations on possible reforms to the funding of local government need to be based on a clear understanding of the expectations and responsibilities of local government, which continue to change."

Caroline Spelman, the Conservatives' shadow local government secretary, said: "Labour are in complete disarray over their plans for this revaluation.

"The announcement today is only a postponement, not a cancellation, and we are still yet to find out what nasty surprises the Lyons review will bring.

"Labour's third-term tax hikes are still to come and all they have done today is reset the clock on this ticking tax time bomb."