Labour's mansion tax policy created "toxic" levels of anxiety about the prospect of a Labour government, the party's leading London mayoral candidate said last night.

Former culture secretary Tessa Jowell claimed the proposed tax was "disastrous" for Labour's election hopes.

She claimed the tax which would have hit properties worth more than £2 million, was effectively a "three bedroom terraced house tax" in many parts of London.

"I think the big problem with the mansion tax is that the properties affected were not mansions," she told the Prospect mayoral hustings in Westminster.

"Properties in the constituency I represented in Dulwich, or in Camden where I live, it was effectively a three bedroom terraced house tax."

She claimed the policy turned off many voters who would never have had to pay the tax.

"It created a sense of anxiety in people which is toxic when allied with the intrinsic mistrust of politicians," she said.

"So it's fine to say it only affects [properties worth £2 million] but nobody believes that and I knocked on so many doors particularly around the North London ring where people said I'm not going to vote Labour because of the mansion tax. You ask how much their house is worth and they say it is worth £700,000 and I say you will never pay the mansion tax and they say well you say that now but wait until you get in power.

"So in that sense it was emblematically disastrous to us."

Jowell's rivals Diane Abbott, David Lammy, Christian Wolmar and Gareth Thomas also criticised the tax.

However, former shadow justice secretary Sadiq Khan declined to criticise the policy, calling for new higher rates of council tax instead.

"Roman Abramovich shouldn't pay the same rate of council tax as Tessa Jowell," he added.