A bid to update council tax bands set more than 20 years ago has been launched in the Lords.

Tory Lord Marlesford's Council Tax Valuation Bands Bill would ensure the bands better reflected today's property prices.

It sets a new range of valuation bands starting at homes below £250,000 and rising to a top one for those over £20 million.

The change would apply only to homes bought or sold since April 2000. Those bought or sold before then would continue on the valuation bands first set in 1992.

Lord Marlesford said it was no longer fair or publicly acceptable that the most expensive properties paid just three times those of the lowest value under the present system.

Under the Bill, properties in the top band would pay £42,000 a year compared to the present of around £3,000, making a greater contribution to local government costs.

Hailing the change as "practical, cost-effective and much overdue," Lord Marlesford said council tax had served the country well but needed updating in England.

Tory Lord Sherbourne of Didsbury backed the Bill, saying it was anomalous that bankers and oligarchs living in very expensive homes currently were taxed at the same rate as those in "quite modest homes".

Communities and local government minister Baroness Williams of Trafford said the Government had reservations about the Bill, which was the "very picture of a punitive mansion tax," long opposed by ministers.

Lady Williams warned it established a two-tier system with potential complications for those administering it, creating confusion and unfairness.

"Residents of similar houses on the same street could face radically different council tax bills purely on the basis of when they bought their property."

She said the Government had no intention of conducting a full revaluation during this Parliament. There was no "public clamour" for change.

The Bill was given an unopposed second reading but without government support stands little chance of becoming law.