A paper being considered by Downing Street from left-wing think tank, the Institute for Public Policy Research, argues that the maximum spending on election advertising should be capped as low as £12m compared to the current £20m.
IPPR research using focus groups found that people would back state funding for parties if the amount spent on election TV and billboard advertising was drastically reduced.
The IPPR argues that state funding would lessen the cynicism it found about big business donations to the major parties in recent years.
The Conservatives oppose state funding of political parties, although leader Iain Duncan Smith has indicated support for charities-style tax relief for election spending. Under the IPPR proposals, parties could opt out of state funding and raise their own money, but individual donations would be capped at £5,000.
Senior Labour Party advisers argue that much of the advertising spend in the 2001 general election was wasted, as opinion polls hardly moved for the duration of the campaign.
Former Labour adman Chris Powell, who is also chair of IPPR trustees, recently called for party political broadcasts to be given the same surprise element as commercial advertising by allocating them unannounced as a way to ensure they reach a significant proportion of the electorate.
The IPPR's full proposals on state funding are expected to be published in October following consultation with the other parties.
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