(Updates with reaction)

By Adrian Croft and Tim Castle

BLACKPOOL, England, Oct 1 (Reuters) - Britain's opposition Conservatives, on alert for a snap election, promised cuts in inheritance and property taxes on Monday, pledging to fund them with a levy on wealthy foreigners who pay little tax in Britain.

Business experts voiced concern that targeting the rich could drive away wealth and expertise from London's financial centre, an engine of British prosperity, and weaken the economy. Finance minister Alistair Darling said the sums did not add up.

The Conservatives' finance spokesman, George Osborne, said there was a clear dividing line between Prime Minister Gordon Brown's high-taxing Labour government and a Conservative Party he said was "the party of aspiration".

"I for one am happy to put these clear choices before the British people at a general election," he told the party's annual conference in the northern seaside resort of Blackpool.

Brown's Labour Party has taken a lead of up to 11 points over the Conservatives in opinion polls, tempting Brown to consider calling a snap general election this month or next.

Brown, who replaced Tony Blair in June, would be aiming to give Labour a record fourth consecutive election victory.

In a proposal sure to resonate with the British middle classes, Osborne said a Conservative government would spare nine million people from paying inheritance taxes -- duties on the wealth bequeathed in wills.

Soaring house prices in the past decade have sucked many middle-class families into the net for the tax.

CHEERS FROM THE FAITHFUL

Osborne's promise that, if elected, the Conservatives would raise the threshold at which death duties must be paid on estates to one million pounds ($2 million), from 300,000 pounds now, brought cheers from the party faithful.

He also announced plans to help first-time home buyers by exempting most of them from a tax on property sales.

Both measures would be financed through an annual levy of 25,000 pounds a year on rich foreigners living in Britain who pay no tax on their overseas income.

Wealthy foreigners such as Chelsea football club owner Roman Abramovich and steel magnate Lakshmi Mittal have flocked to London, but the relatively small amount of tax paid by people who do not have their tax base in Britain has sparked anger.

The Conservatives estimated that the levy would bring in 3.5 billion pounds a year, exactly covering the cost of the inheritance and property tax giveaways.

Darling said the tax on wealthy foreigners would bring in only 650 million pounds, so the Conservatives could not afford to cut inheritance tax. "There is a gaping black hole at the heart of their tax and spending plans," he said in a statement.

Richard Lambert, director-general of the Confederation of British Industry, a leading business group, said Britain should be "wary of driving jobs and opportunities away from the UK."

Andrew Tailby-Faulkes, a tax partner at accountants Ernst & Young, also urged caution. "These changes could hit the City (of London) hard and have an adverse economic impact on the UK."

Osborne said that, if elected, he would always look for ways to bring taxes down, but said he would not promise "unfunded, undeliverable tax giveaways".

In a speech at Reuters London headquarters on Monday, Brown ruled out any potential pre-election giveaways in this month's spending review, but promised to stump up the cash for a 16-billion-pound project to build a new rail link across London if businesses played their part too. (Additional reporting by Sumeet Desai)

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