Rural MPs have welcomed revised proposals from the government on local authority funding.

It follows an announcement by communities secretary Greg Clark who set out new measures to support rural councils during the transition to full business rates retention.

Under the measures, the rural services delivery grant will increase from £15.5m this year to £80.5m next year.

Ministers will also provide a £150m a year transitional fund for the biggest losers over the next two years, of which £32.7 million will go to rural areas.

    See also: Fivefold rise in rural services delivery grant

In the meantime, the government will carry out a Fair Funding Review, which will inform the move to 100% business rates retention scheme.

The new assessment will be an opportunity to highlight the particular needs of rural areas.

According to research by the Rural Services Network, residents in rural areas currently pay £81 more in council tax than their urban counterparts, earn less, and yet see urban residents receive 45% more in central government funding for their council services.

This is despite the fact that services in rural areas are more expensive to deliver because of an older, sparser population.

The government's provisional settlement, set out in December, would have reduced the overall amount of central government funding for rural councils by over 31% over the four year period, whereas urban councils would only have received a 22% average cut.

Graham Stuart MP, chairman of the Rural Fair Share Campaign, said: "The government's proposals which came out before Christmas were unacceptable.

"I've led the Rural Fair Share Campaign for years now to get the government to close the urban-rural funding gap.

"In the last parliament, ministers accepted our arguments and gradually began to reduce the deficit. The provisional settlement would have not only failed to narrow the gap any further, but would have actually taken us backwards and redistributed more money to urban councils.

Mr Stuart said he cautiously welcomed the government's new proposals, and the clear recognition of the challenges of delivering services in rural areas.

"We will be making submissions to the funding review to ensure that the needs of an older, poorer and sparser population in rural areas are properly taken into account.

"This is only a small step on the journey to fairer funding, but I am pleased that ministers have listened to our concerns.

Mr Stuart added: "Together, rural MPs from across England were able to make representations to ministers. We have not been asking for any special favours for rural areas.

"This is about basic fairness. Our rural constituents have the right to expect to be taxed fairly and to receive a fair amount of support for their local services."