* Government leaning towards standardised cigarette packaging
* Such a move "highly likely" to cut child smoking -report
* Opposition party criticises delay, industry opposes move
* New rules could be law by 2015, subject to final decision (Adds reaction, context)
By William James
LONDON, April 3 (Reuters) - Britain looked set to force tobacco companies to standardise cigarette packaging after a government review said on Thursday that the move would help cut smoking rates, although ministers were criticised for delaying a final decision.
A review commissioned by the government in November showed "compelling" evidence that plain packaging would improve public health and cut the number of child smokers, junior health minister Jane Ellison said.
"It is in my view highly likely that standardised packaging would serve to reduce the rate of children taking up smoking and implausible that it would increase the consumption of tobacco," Cyril Chantler, who conducted the review, said in a letter to Health Secretary Jeremy Hunt released on Tuesday.
Draft regulations and the results of a short consultation would be published this month allowing the law to come into force by May 2015, the month of the next election, she said.
The opposition Labour Party welcomed steps towards a ban on branded cigarette packets, but criticised the government for delaying a final decision by holding a consultation.
Labour health spokeswoman Luciana Berger said there was an overwhelming body of evidence in favour of standardised packaging and there was no excuse for further delays.
"Over 70,000 children will have taken up smoking since the government announced the review," she told parliament. "How many more children are going to take up smoking before this government takes firm and decisive action?"
Tobacco firms say the move would encourage counterfeiting and smuggling and have little effect on smoking rates. Britain's tobacco market is worth about $28 billion a year, according to Euromonitor International, and Britain collected 8.56 billion pounds ($14.24 billion) in duty on cigarettes last year.
If the government sticks to its resolve, Britain would be following Australia, which in 2012 brought in laws forcing cigarettes to be sold in plain green packaging with graphic images showing the damaging health effects of smoking.
New Zealand and Ireland have said they will introduce standardised packaging too.
Shares in the two big London-listed tobacco companies, Imperial Tobacco and British American Tobacco both dropped by about 0.5 percent on the government statement.
"You can only look at Australia who have had plain packaging for over a year. What you see is increased illicit cigarettes and consumers down-trading and neither of those things are particularly positive for the tobacco industry," Panmure analyst Damian McNeela said.
In Australia, the government has been criticised for not doing enough to defend the merits of its packaging legislation and the debate over whether the ban has worked has suffered from a lack of hard data. ($1 = 0.6012 British pounds) (Additional reporting by Martinne Geller and Kate Holton; Editing by Andrew Osborn and Louise Ireland)
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