National Exemption Orders, which are currently granted to some larger charities to let them carry out door-to-door collections without applying for new licences each time, are unfair and should be abolished, Lord Hodgson said.

Local authorities have complained that they are not always told by the NEO-holders when collections will take place so they can’t keep accurate records and therefore allocate the remaining slots to smaller, local charities. This causes resentment, said Lord Hodgson in his Charities Act review.

In addition, holders are increasingly entering into agreements with commercial organisations who carry out face-to-face or textile collections under the auspices of the charity's Exemption Order.

Lord Hodgson pointed out that NEOs were originally created for flagship occasions such as Poppy Day or Christian Aid Week, but their use has expanded and is now causing "unfairness and complexity in the system". As a result, he recommends they should be scrapped.

But Institute of Fundraising chief executive Peter Lewis warned that the 40 or so large charities with National Exemption Orders will be up in arms at this recommendation.

British Heart Foundation, Oxfam and British Red Cross will be among those affected.

He said: “The absolute proposal to abolish exemption holders needs to be looked at very carefully. We must ensure that the benefits outweigh any new costs or bureaucracy.

“We understand the desire to balance between large national charities - some of whom are NEO holders, some who aren’t - and smaller more local charities, however we are concerned that as is the proposal will mean far more bureaucracy for charities and local authorities alike. Lord Hodgson’s proposals will need careful and detailed examination.”