Thanks for the advice.
I called several estate agents in my area this morning and asked them how much they charged for a renewal fee. The prices varied but the cheapest was £48, the most expensive was £100, still £58 cheaper than the invoice i received!
I get the feeling that my LL wants a secured tenancy so i'll respect that, its her house.
What i have done though is email my LA informing them of their competitors prices for the same fee and asked them to waive it or offer us a decent discount to put it inline with the other agents in the area. I don't mind paying something as long as it's reasonable and i don't deem £156 to be acceptable.