NEW powers for Scotland on tax, benefits and transport have been announced by the UK Government.

Powers to set income tax levels, create new benefits, vary the bedroom tax, limit fixed odds betting terminals in bookmakers and scrap Air Passenger Duty were revealed two days before the deadline of Burns Night.

UK ministers said it was home rule and the pre referendum 'vow' is delivered in full.

First Minister, Nicola Sturgeon however, said the UK held a veto over key decisions which she said fell short of what was promised in the Smith commission proposals.

The Prime Minister, David Cameron came to Scotland to launch the draft legislation, which his ministers said could be in place a early as December next year.

It allows Holyrood to set different rates of income tax and different thresholds at which it is paid.

Scottish ministers will have ability to create new benefits and have discretion over elements of universal credit, which remains reserved to Westminster and will be rolled out across the UK, including Scotland.

Nicola Sturgeon said it was not Home Rule, the UK held a veto on key decisions and the plans were a "watering down" of the Smith Commission proposals.

She said: "The legislation published today does not represent the views of the Scottish Government, but it does represent some progress.

However, too much of what the Prime Minister has set out imposes restrictions on the recommended devolved powers and would hand a veto to UK ministers in key areas.

"For example, the proposals on welfare do not allow us to vary Universal Credit without the permission of the UK Government. That means under the current proposals we will not have the independence to take action to abolish the bedroom tax. "

The Prime Minister met with Ms Sturgeon and afterwards he said both governments and parliaments had to work more closely together to use the new powers.

He said: "There's a good working relationship. There is a lot of positioning going on between Labour and the SNP and the fight they are having with each other.

"We have seen a big change from the SNP overnight which is hard to explain."

Scottish Secretary Alistair Carmichael and Chief Secretary to the Treasury Danny Alexander said there was no veto.

Mr Carmichael; said: "I would be astonished if the Scottish Government didn't find something to criticise."

He added: "There is no veto."

Mr Alexander said there is no veto. It requires mature consultation."

However Ms Sturgeon said: "When you require the agreement of another person to do something that is a veto."

She added: "And the paper confirms that the Scottish Government will still have to work within the framework of austerity being imposed by the UK Government. It also suggests that Scotland's capital grant could be replaced by borrowing powers and not augmented by them as was clearly the intention of the Smith proposals.

"In these crucial areas the clauses set out today appear to be a significant watering down of what was promised by the Smith Commission and need an urgent re-think by the UK Government."