UPDATE 1-British cigarette branding plan stalls, prompting criticism
* Government says yet to make a decision on plain packaging
* Health groups 'deeply disappointed' by delay on new laws
LONDON, May 8 (Reuters) - The British government is still considering banning company branding on cigarette packets even though it omitted proposals from its legislative agenda laid out in parliament on Wednesday, Prime Minister David Cameron said.
Britain had looked set to become the first European country to force cigarette makers to use plain packaging, a step opposed by the tobacco industry, which sees it as harming their profits.
Queen Elizabeth made no reference to the plans in a speech setting out the government's legislative plans for the year ahead, drawing criticism from opposition lawmakers and disappointment from anti-smoking groups.
However, Cameron told parliament that the government was still looking at the issue.
The Department of Health held four months of consultations last year to gather evidence on whether standardised tobacco packaging would discourage young smokers and help existing smokers ditch the habit.
"This an important decision and we make no apology for taking time to get it right. We are closely watching what is happening around the world," a department spokesperson said.
Last year, Australia implemented a law saying cigarettes must be sold in olive green packets carrying graphic health warnings.
Cuba, whose luxury cigars are world renowned and feature distinctive packages, launched a challenge against the Australian law at the World Trade Organisation last week.
Despite its absence from the government's plans, the leader of the opposition Labour Party offered to help speed through any proposed legislation.
"If he wants the bill on cigarette packaging, we'll help him get it through," Ed Miliband said. "It's the right thing to do for public health, it's the right thing to do for the country."
Miliband also questioned the role of government adviser Lynton Crosby in the decision, saying his consultancy firm had worked with tobacco companies.
A spokesman for David Cameron said Crosby had no influence over the contents of the Queen's speech.
Campaign groups wrote to Health Minister Jeremy Hunt expressing disappointment over the omission of the plan from the government's programme.
"The failure to bring forward legislation fatally undermines the Government's credibility on public health issues," said the letter from the Smokefree Action Coalition, an alliance of more than 100 health organisations.
Companies such as Philip Morris and British American Tobacco fear that plain packaging would eat into sales of higher margin brands and say it would encourage the global black market in tobacco.
Imperial Tobacco shares have risen marginally since reports circulated in the British media that Cameron had dropped the initiative.
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