The Government has written to local authorities in England inviting them to consider forming local enterprise partnerships and has announced funding to rebalance the economy from public to private sector.
The letter, by business secretary Vince Cable and communities secretary Eric Pickles, says the Government is working with regional development agencies to enable to transition and is reviewing all their functions.
Functions like inward investment, sector leadership, business support, innovation and access to finance will in future be handled by Whitehall, while the new partnerships will be expected to "provide the strategic leadership in their areas to set out local economic priorities".
As local and regional boundaries do not reflect functional economic areas, they will have to reflect economic geography and include upper tier authorities.
"If you want to rebuild a fragile national economy you don't strangle business with red tape and let bloated regional quangos make all the decisions," said Mr Pickles.
"Urgent action is needed to rebuild and rebalance local economies so that new businesses and economic opportunities spread across the country."
Details will be published later in the summer in a white paper, but the DBIS announcement said the partnerships would tackle issues including planning and housing, local transport and infrastructure, employment, enterprise and business start-ups.
"We are determined to rebalance the economy towards the private sector, so it's important we create a more effective structure to drive economic growth and development across the country," said Mr Cable.
There was no indication whether physical regeneration will be promoted nationally or locally, or at all.
Deputy prime minister Nick Clegg announced a new regional growth fund to help areas - like his own constituency - at risk from public spending cuts.
He said private and public-private bodies would be able to bid for funding by demonstrating their proposals would bring in private investment and jobs.
