David Triesman, Labour's general secretary, said a fall in ad budgets was inevitable if the Government is to go ahead with plans to introduce state funding for political parties. Labour is more than £10 million in the red and there is growing pressure on Tony Blair to bring in taxpayer-funding for all parties.
Triesman is backing a plan to "sell state grants to the electorate by cutting the £20 million spending limit for each party at general elections and imposing a low limit, perhaps £5,000, on political donations by individuals.
He said: "Advertising costs a lot of money. People think it is all a waste of money to have all those newspaper ads and posters at general elections. I don't know if they are useful or not. I have my doubts.
"I think it would be incomprehensible to the electorate if they felt money raised by taxation was being spent on more and more billboards."
Blair has said he wants an all-party consensus before pressing ahead with state funding and the Tories oppose the idea. But Blair is being urged by Labour chiefs and several Cabinet ministers to introduce legislation before the next election without the Tories' backing.
Spending on ads has already fallen in recent elections. In 1997, the Tories spent £13.1 million and Labour £7.3 million. Their budgets dropped to £4.5 million and £5 million respectively in last year's campaign.