Rural taxpayers are losing out when it comes to the services they are paying for, according to a new report.

A study by the Sparsity Partnership for Authorities delivering Rural Services (Sparse) campaign group found that while rural dwellers were seeing rising council tax bills, they were receiving fewer services than their counterparts in the cities.

Campaigners said the situation was "plain fiscal unfairness", adding to calls for reform of the existing system of funding town halls.

Sparse said that while spending in less populated areas was around 90 per cent of the national average, residents were paying around two to three per cent more.

But in inner London taxes stood at 82 to 86 per cent of the national average, but 40 per cent more was spent on services.

Sparse co-chairman Steve Pugsley called on ministers to "close the widening council tax gap between city areas and the countryside".

He added that "as things stand, we are confronted by plain fiscal unfairness".

"The whole of the government's rural strategy is severely undermined by the way in which country dwellers have to pay more to get fewer services," he said.

The lobby group is submitting its findings to the government's official review of council finance, which is being conducted by Sir Michael Lyons.

Pugsley said the current arrangements failed to take account of the costs of providing services to remote rural areas.

"Now is the time for the government to adjust the system better to reflect the higher costs associated with providing local services to country communities," he added.