Householders in Brighton and Hove are being forced to subsidise students' council tax bills by £10 each - adding

up to £1 million extra a year to the bill.

The Government is obliged to reimburse Brighton and Hove City Council for letting full-time university students off paying.

But the burden is being passed on to homeowners because hundreds of undergraduates are missing the deadline to register their homes as exempt.

Research presented to the Office of the Deputy Prime Minister last night showed that 746 student households cost the taxpayer £909,734 this year by failing to register by the October deadline.

Hospital porter Allen Matthews, 59, of Hartington Road, Brighton pays £120 a month.

He said: "Most students are getting away with it as it is, lazing around the house doing nothing but eating, drinking and watching Countdown.

"If we are losing out on extra money, which could be used in other parts of the city, simply because students are failing to register homes, that is an absolute disgrace."

But union leaders and MPs said it was the system, rather than the students, who should be blamed.

Rosa Wilson-Garwood, who is the finance officer at the University of Sussex's student union, said: "If you are asking me if I think students are to blame for registering their homes late, I would say no - probably not.

"The first thing that happens when a student moves into a new home is a letter comes through the door from the council asking them to register as students and become exempt from council tax.

"There is a link on the Sussex University website to do it and it is in students' interests to do it straight away otherwise they will get a court summons."

Brighton University student Charlotte O'Grady said: "Most students don't even get into their homes until October or late September so there is not much time for them to register."

Tory MP Grant Shapps, who carried out the research into the problem, said: "Barely a day goes by without receiving letters from cash-strapped OAPs battling to pay inflation-busting council tax bills from their already stretched pensions.

"Now to add insult to injury, the Government has come clean and admitted that a sloppy loophole means that local taxpayers, like my pensioners, are effectively footing the bill for students.

"People are rightly asking why the Government has taken so long to wake up to this crisis."

The MP has called on the Government to look into the funding system as part of the Lyons Review of council finances.

A spokesman for the Office of the Deputy Prime Minister said: "Sir Michael Lyons will make his recommendations to ministers at the end of the year and we will have to see what his recommendations are."