ERIC Pickles has been accused of trying to ‘gag’ local councils critical of his policies, sparking a fresh clash with North-East leaders.

A new law will prevent town halls arguing that huge Whitehall grant reductions have forced them to make unpopular cuts to services, Labour has protested.

And it could even stop them using the term ‘bedroom tax’, it was claimed – which ministers insist must be described as removing the ‘spare room subsidy’.

Labour said the legislation – which was debated by MPs yesterday (Tuesday) – will turn Mr Pickles, the Local Government Secretary, into “censor-in-chief”.

Furthermore, it comes ahead of further steep cuts to council funds - of ten per cent, from 2015, on top of the loss of 33 per cent of their grants between 2011 and 2015.

The Local Government Association (LGA) has warned that every local council in the North-East is in danger of going bust, because they will again be hardest hit.

Mr Pickles has provoked controversy by repeatedly denying his grant cuts have forced councils to withdraw services – accusing them of talking “tosh”.

But Councillor Bill Dixon, Darlington’s Labour leader, immediately vowed: “We will find a way around this.”

He said: “This is typical of Eric Pickles. We are supposed to live in a free society, with free speech, until you contradict Eric – in which case you are banned.

“Bedroom Tax is a term that has stuck as much as Poll Tax, but it wasn’t invented by Labour councillors, but by the people affected – so Eric is a modern-day King Canute.”

The row blew up over a clause inserted into the Local Audit and Accountability Bill, giving Mr Pickles fresh powers over the information produced by town halls.

The Local Government Secretary has accused some councils of flouting a voluntary code designed to ensure “objectivity” in their publicity for residents.

Therefore, he is introducing legislation to prevent “political points” being made on posters, or in council free sheets put through letterboxes, for example.

However, a spokesman for Mr Pickles denied he was attempting to stifle dissent, merely to prevent councils publishing “political propaganda”.

He said: “They are quite free, providing they use their own or their party funds to do so, to issue publicity, or to come together with other parties to mount a publicity campaign.

“What they are not allowed to do is to spend taxpayers’ money to campaign with a message designed to influence voters about government policies.”

But Andy Sawford, Labour’s local government spokesman, said most councils were unaware of the gag which was being introduced “behind their backs”.

He said: “Mr Pickles is taking a power of censorship to direct what issues and information councils can talk about and what language and phraseology will be allowed.

“This is so extraordinary that one might assume that, if councils knew the full extent of his plans, they would resist.”