Ok, so we have an official from ONE council (Peterborough) in 2004 who cited "national legislation" - in fact planning laws on advertising - to ban flag flying except from a flag pole (note - all flags, not just St George's flags). Quite rightly the council then backed down, which brings them in line with the many other councils who turn a blind eye to such minor breaches of planning law. To suggest the St George's flag has been in some way singled out is more of a reflection of the willful paranoia of a narrow strata of the English population and the readiness of the media to seize on a "good" story than anything else. Of course, it will then be repeated and repeated and become part of the fakelore trotted out by those who wish to have us believe English culture is under seige.

This is from the House of Commons website:

"Individuals and organizations may fly the Union Flag whenever they wish, subject to local planning requirements. These have been relaxed recently. The DCMS Flags Protocol website advises as follows:

Under Schedule 1 Class H of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, national flags, the flags of the Commonwealth, European Union, the United Nations, English counties and certain saints can be flown without the express consent of local authorities as long as they satisfy the standard conditions for the display of advertisements generally and the conditions and limitations set out within Class H itself.
For saints' flags, the conditions are that they can only be flown in the county with which the saint is associated. This means that the St. Piran's flag may be flown freely in Cornwall, but express consent would be required for it to be flown elsewhere in England.
If any of these flags are to be flown no further planning permission is needed for the flagpole, however it may be required if other flags are to be flown"

The Union Flag and Flags of the United Kingdom, House of Commons June 2008

As for the Sun story, I suspect we'd have to look at the report they cite for the truth. Oh look, here it is: Childhood Wellbeing. And on page 65 of a 76 page report there are a couple of paragraphs on this issue - the very ones the Sun chose to highlight (interestingly they didn't highlighted the "aggressive defensiveness evident in many of the discussions" some of the parents interviewed displayed around race and immigration). It should also be pointed out that this was a small study, interviewing 9 groups of around 20 parents to elicit their perceptions. They were not expected to evidence their beliefs and assumptions (and of course, neither should they be in a study that is essentially designed to get people to share their attitudes and perceptions).