Andy Burnham was last night urged by Labour's favourite think tank to reform housing taxes to ensure Londoners pay their 'fair' share.

In a new report, the Resolution Foundation claimed Londoners are underpaying council tax by £3.1billion relative to the value of their homes – with the rest of England making up the shortfall.

According to the think tank, this could see someone living in a home worth £100,000 paying almost three times as much tax relative to the value of their property than someone living in a £1,000,000 home by the end of the decade.

And while 80 per cent of London households 'win from the current system', 85 per cent of households in the North-East will overpay tax relative to their home's value by 2031, the think tank suggested.

The Resolution Foundation blamed 'bad tax design' and a 'failure to account for almost four decades of house price growth' for the imbalance.

It also claimed that 'fear of complaints from those who benefit from the current system' has prevented successive governments from taking on 'much-needed reform'.

Hannah Aldridge, who helped author the report, said: 'Our housing taxes fall heaviest on those least able to afford them and have turned into a huge £3.1 billion subsidy for those living in London – paid for by households across the rest of England'.

She urged Chancellor John Healey to 'set out a sensible roadmap to reform in the Budget next month' to restore 'fairness' to the system.

But the Conservatives last night warned the proposals could prompt the PM to escalate his 'war on aspiration'.

Shadow housing minister David Simmonds said: 'Labour are already hiking taxes on the family home, with council tax soaring by 18billion by 2030, hitting both North and South.

'Now their favourite think tank wants them to go even further with a tax raid targeted at London. 

'There will be no single person discount on such a tax, and homeowners will be penalised for improving their homes.

'It won't be long before Burnham escalates his war on aspiration further, likely with a house price tax that rises as property prices increase. 

'The Conservatives are the only party that will fight to keep tax on the family home down.'

This comes as concerns were mounting this week that the Chancellor would lower the threshold of Labour's mansion tax at the Budget to capture properties worth £1.5million or more.

Research suggests the move would disproportionately hit homes in London and the South-East, with almost 80 per cent of properties affected.