Birmingham is to benefit from almost £300 million of Government cash to help tackle crime, unemployment, under-performing schools and health inequalities in the poorest parts of the city.

The money, to be paid over the next three years, is the driver for a new Local Area Agreement under which the city council sets targets to reduce social deprivation in return for a relaxation of Whitehall spending controls.

The agreement will give the City Strategic Partnership Be Birmingham – a council-led body representing civic, business, community and faith interests – greater flexibility over how it uses the money to ensure that resources are targeted more effectively in the areas of greatest demand.

Next week the council cabinet will agree 19 key priorities for Birmingham between now and 2010/11.

They are likely to include creating better conditions for sustainable economic and population growth, improving transportation infrastructure, creating more jobs, reducing the number of welfare benefit claimants, tackling climate change, improving educational attainment and cutting crime.

The LAA comes with tacit Government and council admission that previous efforts to reduce poverty in Birmingham have failed, even though hundreds of millions of pounds has been invested in inner city regeneration schemes since 1997.

A council spokeswoman admitted: "There are pockets of worklessness where the rate exceeds 30 per cent, compared to a city rate of 18.7 per cent. Over 45 per cent of all the workless claimants in the city are in these areas.

"Despite the best efforts of all the partners involved economic inactivity has increased since 2002."

Between 2002 and 2007, the number of people claiming Jobseekers’ allowance and other benefits increased in 33 of Birmingham’s 40 wards.

Some of the targets set out in the LAA would produce only marginal improvement over a three-year period.

It is proposed to cut the number of adults claiming benefit by less than one per cent and increase the number of adults in work by 1.5 per cent.

At the heart of the LAA lies the new Working Neighbourhoods Fund, a replacement for the Neighbourhood Renewal Fund, which will be worth £114 million to Birmingham. The main aim of the WNF is to reduce the number of people out of work and claiming benefit in the most deprived neighbourhoods.

Almost £20 million will be allocated to specific themes of community safety, environment, culture, children and young people and housing.

Birmingham’s 20 ward committees will each receive £100,000 a year to be spent on local projects.

Paul Tilsley, the deputy leader of Birmingham City Council and chairman of Be Birmingham, insisted the LAA targets were realistic.

Coun Tilsley (Lib Dem Sheldon) added: "We have a situation where the economy is slowing down. We can’t magic jobs out of thin air.

"We will do all we can to promote Birmingham as an attractive place in which companies can invest. We have set ourselves up as a low tax council, which I think is important.

"We don’t want to set ourselves up to fail, because that’s a futile exercise, but some of the targets will be very difficult to achieve."

He admitted unemployment remained "stubbornly high" and would be difficult to tackle in an economic downturn.

Coun Tilsley added: "Tackling unemployment is a top priority for the city council and this new approach will be key to taking forward the city’s plans to tackle this issue.

"We have already made good progress in number of significant areas such as tackling crime and improving education and tackling worklessness will help to underpin these developments.

"The Working Neighbourhoods Fund will be a locally influenced fund that will provide an opportunity to intensify and focus our efforts on tackling worklessness and creating conditions for growth and investment in priority neighbourhoods."