The government is being urged to scrap the expensive 10-yearly paper-based census and rely instead on locally-collated information from increased data sharing.

A report from think tank New Local Government Network (NLGN) claims the change would produce more reliable statistics at half the £500m cost of issuing, collecting and processing hand-written forms distributed to every household in the UK once every decade.

Author Nigel Keohane said the state should maintain a new national address database with a legal requirement on householders to keep registration up to date, and reform guidance governing the exchange of data already collected.

And local authorities and other public bodies should be required by law to develop a minimum population dataset for national statistical purposes in co-operation with other public bodies.

NLGN called on the Cabinet Office to mount an urgent review of the alternatives in an attempt to scrap the next census in 2011 - or if too late, to make it the last.

Existing census-derived statistics are used by central government to allocate grant aid to local government and plan services, but many local authorities complain the figures are out of date before they are produced, seriously understating migration.

The report instead advocates a “local head-count” of each areas' population, taken from a range of public services such as electoral registers, GP patient registers, school places records and tax data. The information could be collated to deliver a more accurate reflection of who lives in the local area.

Other available databases range from the electoral register, school meals, council tax, council tax benefit, the Department for Work and Pensions, Ordnance Survey, the Driver and Vehicle Licensing Authority, university student data and the police.

Keohane said the use of unique property reference numbers and unique citizen reference numbers combined with placing the system in local authority hands would minimise " Big Brother" privacy fears, but data-sharing law and government guidance would need to be examined in detail to facilitate the necessary sharing of data.

"Significant challenges relate to matching individual identities between multiple data sources, harmonising definitions and classifications between the different types of register and achieving temporal consistency between sources and issues of differing scope and content," he said.

Keohane said a change in the law would be required to settle the “tortuous dispute” over data ownership between the Ordnance Survey and the National Land and Property Gazetteer, and possibly the Post Office to enable the address register to be set up.