A report from the Cabinet Office suggested such schemes could be useful in rationing access to overcrowded areas and generating revenue to invest in improving local infrastructure.

The recommendations of the performance and innovation unit do not represent Government policy and were put forward as part of a process that will lead up to the long-awaited Rural White Paper next year.

Nevertheless, the authors of the inquiry, which was chaired by Andrew Smith, the Treasury Chief Secretary, said the package could form the basis for the most radical transformation of rural policy for 50 years.

In setting out to modernise one of the last untouched aspects of the post-war settlement, the report also called for an overhaul of the planning system to give more support to enterprise.

In particular, it proposed the removal of unnecessary national regulations to encourage farmers to diversify into other commercial activities and convert redundant farm buildings for business purposes.

This would allow farm buildings to be used for light industry, office or other commercial activities without the need for planning approval by local councils.

Similar suggestions were made by the last Conservative government 10 years ago but dropped after an outcry at the prospect that buildings would lose their character and the countryside become clogged with traffic.

The report also heralded a rethink of the traditional presumption against development on prime farmland, which amounts to about one third of the agricultural landscape in England.

It suggested that ending this restriction would promote economic development throughout all parts of rural England rather than concentrating it on poorer grade land as at present. The report pointed out that much of the land currently classified as "best and most versatile" consisted of large open fields under arable crops.

Although it made clear that any changes should not jeopardise the environment, it raised fears that the Government was poised to give approval to concreting over the Green Belt.

The Council for the Protection of Rural England urged ministers not to scrap the special protection enjoyed by prime agricultural land without finding a more effective alternative, since the system had been a crude but effective way of safeguarding the countryside from urban sprawl.