Local government secretary Eric Pickles has announced a toughening-up of rules governing taxpayer-funded council newspapers and, subject to consultation, he intends to "revise and tighten" the Code of Recommended Practice for Local Authority Publicity, which was introduced by the Conservatives in 1988 but amended by Labour in 2001.

Pickles said local newspapers are a "vital part of any thriving democracy" because of "the rigour with which local journalists scrutinise the activity and spending of councils".

He added: "Councils should spend less time and money on weekly town hall Pravdas that end up in the bin and focus more on frontline services like providing regular rubbish collections.

"In an internet age, commercial newspapers should expect, over time, less state advertising as more information is syndicated online for free. The flipside is our free press should not face state competition from propaganda on the rates dressed up as local reporting."

Local newspaper publishers have long called for better governance of the publications. While monthly newsletters are not seen as a problem, publications such as H&F News in the borough of Hammersmith and Fulham, have been criticised for being almost identical to an independent publication, with very little reference to the council it represents.

Publishers are concerned that by including content, such as sports reviews and TV listings, council newspapers are essentially competition for readership. They also offer competition for advertising revenue, which is the lifeblood of local papers.