Communities secretary, Eric Pickles, has vetoed the appointment of the new chief executive of the Audit Commission, in a bid to tackle rising public sector salaries.

In the week the Government published the civil service ‘rich list’, Mr Pickles hit out at the commission’s plans to hire a new boss on a pay and pensions package of £240,000.

The post is the first battleground between the secretary of state and the local government sector since the Conservative/Liberal Democrat coalition government came to power.

Conservatives vowed to tackle town hall pay, but the salary to replace outgoing commission chief, Steve Bundred, was always set to be a sticking point.

Final interviews for the new post were held more than a fortnight ago, and the commission board is believed to have selected a current council chief executive as its preferred candidate.

Mr Pickles attacked the commission for the ‘massive’ salary, despite reports from the auditors ‘slamming the spiralling level of pay among local authority chief executives’.

He also criticised the commission for spending £56,000 on lobbying in the past 12 months, in a bid to block Conservative plans to scrap CAA.

According to the Conservatives, the failed lobbying campaign and the abolition of CAA now means a slimmed-down role for the commission. Mr Pickles said: ‘The spiralling level of pay and perks for town hall bosses stops here. By blocking this massive salary for the Audit Commission, I want to send a signal to councils across the country that they, too, can stop paying ridiculous sums to chief executives.

Councillors should have the confidence to set sensible salaries that the public deem fit and proper. Everyone will need to do their bit to cut unnecessary costs.

‘We should lead from the top – cutting bosses’ pay from the Cabinet downwards. It’s time to restore an ethos of public service.’

Chairman of the commission, Michael O’Higgins said only that the board would consider the issues raised by Mr Pickles at its next meeting, next week. Local government insiders have raised concerns that a restricted salary could mean the vacancy would go unfilled.

The civil service rich list gives an indication of the senior salaries after several former town hall chiefs featured in the list.

Current council chiefs face having their salaries published from next year. Former Birmingham City Council chief executive, Lin Homer, tops the high earners in her role as chief executive of the UK Border Agency, earning more than £200,000 a year.

Cabinet Office minister, Francis Maude, will chair a new Public Sector Transparency Board. It will support and challenge public bodies in the implementation of transparency and open data.

Mr Maude said the announcement would open up the corridors of power. ‘Transparency is at the heart of the Government’s programme. We are pulling back the curtains to let light into the corridors of power. ‘We are determined to set an example for the wider public sector, and to create a “right to data” as a core part of government business.’

Eleven civil servants refused to have their salaries revealed in the list, according to the Cabinet Office.