Labour leader Ed Miliband has pledged to reintroduce the 10p income tax band funded by levying a 'mansion tax' on homes worth more than £2m.

Miliband described the decision taken in 2008 by then chancellor Gordon Brown to abolish the 10p rate as a 'very bad mistake'. He said reintroducing the lower rate would benefit 25m basic rate taxpayers and would send a 'clear signal his party was on the 'side of working people'.

The size of the lower rate tax band would depend on the amount raised by the tax on homes, Miliband said in a speech yesterday.

Analysts said the pledge, which may not even make it to the manifesto, was a political rather than economic statement, and that the tax rebanding would be worth around 67p a week to taxpayers.

If Labour wins the next election in 2015, Miliband said a new administration would focus on reforms to make the tax system 'fairer'.