'Ordinary folk' and pensioners were hailed as the winners under new proposals to shake up council tax.

Chancellor Gordon Brown has been handed Sir Michael Lyons's report on local government funding, which includes a recommendation for extra council tax bands for the most expensive and cheapest homes.

One of Sir Michael's recommendations was for a new 'top rung' band for houses worth £1m.

Another is that people should be entitled to receive council tax benefit automatically, instead of having to claim it.

However, what remains unclear is when the most controversial aspect of the review would materialise - a mass revaluation of the country's housing stock.

The Government has promised no such revaluation would occur during the lifetime of this Parliament.

Revaluation is expected to push millions into higher tax bands.

Labour city councillor Ed Turner, former strategic development portfolio holder, said: "What he (Lyons) seems to be saying is that very expensive houses should have a higher tax and the cheaper should have cheaper tax. It's good news for pensioners and ordinary folk in Oxford."

Revaluation has already caused alarm in Oxfordshire, with Oxfordshire County Council leader Keith Mitchell, who lives in Adderbury, concerned that taxpayers could face major increases.

Council tax bills for 2007-08 have already been sent. If you own a Band D property in Blackbird Leys, Oxford, for example, you will pay £52.51 more this year than in 2006-07.

Nationally, council tax increases in Band D average about £53. Opponents of council tax, including the Liberal Democrats - the party running the city council - argue a fairer system would be a local income tax.

Stephen Tall, executive member for better finances, said of Sir Michael's report: "There will be incremental benefits for the poorest, but for the vast majority of people it's going to be the same old council tax bill. It's an unfair tax."