Westminster could cede control over income tax to the devolved Welsh government, David Cameron has confirmed along with plans for a referendum.

Mr Cameron bizarrely railed against his own Parliament yesterday as "a foot on the windpipe of the Welsh Assembly," promising a Bill in the Commons to allow a referendum on devolving powers to set income tax rates.

"We believe in a strong Wales within a strong United Kingdom," Mr Cameron said.

"I think it will make for a better accountable government. I think it is good for a government to be responsible for raising some of the money it spends."

But First Minister of Wales Carwyn Jones actively opposed the policy.

The the Labour government welcomed the devolution process, he said, but was "not persuaded" by arguments to devolve income tax.

Tax reform campaigner Richard Murphy said the current single income tax rate across Britain gathered the most from wealthy Londoners and spread their wealth across poorer regions - like Wales.

"But suppose that if Wales secures its own right to tax income then London follows - which has by far the highest level of income?" he asked.

"And suppose London then cuts rates - as you can imagine Boris doing.

"What then?

"Will there be as much income to redistribute?

"Or will Wales have to increase taxes to compensate for London not paying enough to Wales?"

There was no need for more than one income tax rate in Britain, he said: "Administratively and in terms of justice that makes no sense."

Welsh TUC general secretary Martin Mansfield said it welcomed any devolution of power to the Welsh government, with yesterday's announcement "an overdue but significant step."

"The principle of devolving income tax is positive and we will play our full part in that debate when the people of Wales decide," he said.

But Mr Mansfield added that Westminster needed an urgent overhaul of the "outdated" Barnett formula used to allocate funding to the devolved regions before the tax issue could be addressed.

"We should also not forget that this UK government has slashed Wales's finances to pursue its ideology of austerity," he said.

"The whole of the UK is being held back and Westminster economic policy must change if Wales is to reach its true potential."