COUNCIL tax bills are likely to soar across the North because of a Government "double whammy", householders were warned last night.

Three counties are on a short list of local authorities to be hit twice by controversial new funding rules.

Householders in County Durham, North Yorkshire and Northumberland can expect to receive big increases in their bills - unless council chiefs opt to cut services instead.

The warning comes only days after it was claimed that the average increase across England next year would be 12 per cent, or around £100 for a Band D home.

The first part of the double whammy is that County Durham, North Yorkshire and Northumberland are all ineligible for extra Government help for areas where the cost of living is high.

So-called Area Cost Adjustment (ACA) is restricted to local authorities in London and the South-East, as well as a few councils in the South-West.

However, the three northern shires are not believed poor enough to receive extra cash under what is called "resource equalisation".

As a result, they are considered to have a "healthy council tax base" and Government grants are diverted to poorer areas, normally in Labour's urban heartlands.

Only 30 local authorities across England are hammered in both ways, according to the office of Deputy Prime Minister John Prescott.

Critics say that if an area is too wealthy to benefit from resource equalisation, it is also likely to have a high cost of living - and should get ACA.

Anne McIntosh, Tory MP for the Vale of York, said: "It looks like they will be raiding the coffers of North Yorkshire County Council to subsidise profligate councils in places such as Sheffield and Hull."

This year, the average council tax bill in the North-East rose by 8.9 per cent, although both County Durham (9.17 per cent) and North Yorkshire (11.5 per cent) imposed higher increases.

And, since Labour came to power, residents in a Band D home in the region have seen their bills soar from £723 in 1997 to £1,161 this year.

Although district councils also send out council tax bills, the biggest chunk is to pay for services provided by the county councils - such as schools and old people's homes.

County Durham has condemned the council tax as unfair and called for it to be scrapped, while North Yorkshire is examining discounts for pensioners, who are among the hardest hit.

Even Nick Raynsford, the local government minister, has warned that the level of council tax is edging beyond the "level of acceptability".

Councillor Murray Naylor, deputy leader of North Yorkshire County Council, said: "Do we keep the council tax low and run the risk of not providing what people think they're entitled to, or do we increase council tax and run the risk of alienating people?"

Councillor Don Ross, deputy leader of Durham County Council, warned that any cut in council tax would be at the expense of services.