County councillor Olive McIntosh-Stedman has been charged with council tax fraud.

Ms McIntosh-Stedman, a county councillor for Cowley and Littlemore since 1997, was charged with two counts of making false council tax benefit claims in 2002.

She has denied all the charges, but has quit the Labour group and is currently sitting as an independent. She will appear before Oxford Crown Court for trial next month.

Ms McIntosh-Stedman, 64, of Williamson Way, Rose Hill, Oxford, is a registered nurse with a diploma in women's studies and a degree in publishing.

Last night (Tuesday) she said: "There is a great misunderstanding and all that will be cleared up in due course."

Oxford City Council, which is bringing the prosecution, declined to comment on the particulars of the case or reveal how much it was alleged Ms McIntosh-Stedman tried to claim from the authority.

Former Work and Pensions Secretary and Oxford East MP Andrew Smith, whose job it was to clamp down on benefit fraud, said: "The authorities are quite right to pursue any allegations of fraud and if she has broken the law she must face the consequences like anyone else. However - like everyone else - she is innocent until proven guilty."

A flamboyant character, Ms McIntosh-Stedman is well-known at County Hall - especially at meetings of the full council and decision-making cabinet where she revels in making passionate speeches, often off-the cuff. She is a governor of Peers Technology College and lists her hobbies as writing, poetry, singing and gardening.

Former Labour city councillor Susan Brown, the party's south east regional spokesman, said: "The Labour Party can confirm the resignation from the Labour group of councillor Olive McIntosh-Stedman because she is facing charges in the courts."

One serving Labour county councillor was said to be "gobsmacked" on hearing the news from the Mail.

County council Labour group leader Liz Brighouse said: "Olive has resigned (but) it will make no difference to the group, it will not weaken the group in any way."

The city council has made no secret of its desire to prosecute those it believes to be shirking the responsibility of paying their council tax.

The city council is still owed about £5m in unpaid council tax and has enlisted the help of a private firm to try and recover some of the debt.