Home Office Minister James Brokenshire said he planned to table an amendment to the Police and Social Responsibility Bill to introduce locally set fees to allow local authorities to recoup the full cost of running the scheme.
"There is widespread agreement that the current fees do not cover the legitimate costs of licensing authorities in discharging their functions under the Licensing Act," he told a parliamentary committee.
He reassured fee payers that "licensing fees are not a blank cheque" and there would be a nationwide cap.
But Association of Convenience Stores chief executive James Lowman suggested the government was backtracking on its promise to reduce costs and bureaucracy for business. "Government asks us to believe that they are intent on reducing regulatory burdens, while at the same time heaping new costs on business. Licence fees are already high for small shops. The principle of allowing councils to vary fees according to their own costs is wrong-headed."