The government has announced plans to devolve further powers to local levels in an effort to encourage economic development in the country's poorest areas.
Regional Assemblies are to be scrapped and replaced by Development Agencies. Local authorities will be given strengthened powers to encourage the economic performance of their area.
The government plans to use Regional Development Agencies (RDA) as a mechanism by which to coordinate jobs, economic growth, housing and planning and environmental issues.
This will replace the previous system, which was increasingly regarded as overly complex and overlapping.
The RDAs will be expected to consult widely with businesses, local authorities, trade unions, the education sector and environmental and voluntary groups.
The changes come as a Joseph Rowntree Foundation (JRF) report revealed today that the gap between rich and poor has grown substantially since the 80s and stands at its highest level for forty years.
It found rich, average and poor communities have begun to live further and further apart from each other into economic 'ghettoes', with report author Danny Dorling claiming the south east of England had become a rich householder's preserve.
Local government minister John Healey said: "We want to give local authorities who know their communities best a greater role leading jobs, housing, regeneration and sustainable growth to ensure that no-one is disadvantaged by where they live.
"We want a new relationship between central government and local councils and the regions.
"We want to give greater freedom and powers for good local leaders to innovate, extending their role in promoting jobs, the environment, learning and skills and regeneration.
"And we want to make sure that plans for new homes are linked closely to new jobs, transport and economic growth in the region."
The measures come as part of a government drive to achieve wide-ranging reforms to the way Britain is governed.
Gordon Brown came to office convinced of the need to reconnect with voters. His formula is to devolve power from the executive to parliament, from parliament to local authorities, and from local authorities to communities themselves.
In his first Commons announcement Mr Brown launched a radical shake up of Britain's constitutional arrangements, while earlier this month Hazel Blears announced a plan to let communities decide where to channel some of their local council's funding.