Thanks again for all your responses - this forum has been excellent in delivering comprehensive advice.
On reflection, perhaps I should've titled this thread "I messed up and bought poor quality tiles and the tiler did his best". I purchased the tiles myself from a local independent retailer - they were certainly on the cheaper end of the scale (but not the cheapest), but we selected them on appearance before we knew the price. Although, given the advice provided so far, perhaps we would've looked to purchase something a little more expensive that would avoid the issues we have encountered (caveat emptor I guess).
I've met with the tiler on-site and he apologised for missing the request in the email, but he felt (as others have mentioned here) that the half offset would suit the look of the room better. The lippage is minimal and, as has been suggested, that if just a aesthetic issue then best to leave as is.
With regards to looking to reduce the payment, clearly this touched a nerve and I'll clarify by saying that this comes on the back of a few issues we have had with our contractors on this job. We were advised that we would need to be out the house for 2-3 weeks, and it has now been 8 with no clear end in site. They sacked the foreman halfway through due to an incident on another job and this has impacted the progress and resulted in mistakes (underfloor heating has been ripped up and replaced once already at their cost), so my concern was that if the job had not been done to an acceptable standard, we should not pay the full amount for the work. I don't think this is an unreasonable consideration.