The Government has launched an independent review into the future of local radio stations.

The review was one of the key issues of Lord Stephen Carter's interim Digital Britain report. It will look at the current requirements needed to sustain these stations because various operators are struggling to make ends meet in the economic downturn.

Since 2005 six local radio licences have been returned to media regulator Ofcom. A representative for Ofcom said it had seen no rise in the number of licences returned.

However, a representative for the commercial radio industry said: "The cost of running these stations versus the low advertising revenue is not a good business model in this financial climate."

John Myers, GMG Radio chief executive, who has been assigned to look at the rules governing local content in radio, said: "We know that consumers value local content, particularly on local radio, and that successive governments and regulators have sought to secure this through localness rules."

These radio stations are run on a not-for-profit basis and depend on volunteers to present the shows. They deliver news and information about events that are specific to local communities with geographical areas of up to 5km.

Some stations cater for the whole community while others concentrate on areas of interest. For example, in Newport on the Isle of Wight, there is a station catering for the needs of elderly people and in Leicester there is one especially for children.

Mr Myers will work with a small advisory group to look at the current requirements for a predetermined number of hours of locally produced content an d ask how appropriate and sustainable they are in a digital age. Ideas on how local radio can best be delivered in the digital era will also be discussed.

Mr Myers said: "It is only right that as we move towards a predominantly digital landscape for radio we consider the appropriateness of the current rules and how local content should be preserved in the future.

Lord Carter said Mr Myers’ report would be "key in informing the Government's thinking on the future of local radio".

The review is due to be completed by the end of March.