Birmingham is being urged to learn to love Ken Livingstone and stop regarding London as a rival.

West Midlands Minister Liam Byrne is to hold talks with the Mayor of London about ways in which the region's economy could benefit from a closer relationship with the capital.

The idea, which is being put forward by Mr Byrne, would involve working with London to attract inward investment.

Birmingham and the West Midlands had nothing to fear from London and could benefit from its pulling power, Mr Byrne said.

But the suggestion is likely to raise hackles at Birmingham City Council, where the ruling Conservative-Liberal Democrat coalition has come out firmly against having a directly elected mayor like Mr Livingstone. The council cabinet is refusing to accept demands for a referendum on whether the council should be led by a mayor.

Mr Byrne, in a new year press briefing yesterday, admitted to being a big supporter of elected mayors and he thought Mr Livingstone could help Birmingham and the West Midlands achieve its economic potential.

However, he conceded there were many members in his own party who did not share his pro-mayor views.

Mr Byrne, who held a meeting with Mr Livingstone and regional development agency London First shortly before Christmas, said he wanted to know how the West Midlands could form a partnership with London in order to "compete for global business coming to the UK".

There was a risk at the moment, Mr Byrne said, that multi-national businesses would either establish headquarters in London or ignore the UK altogether.

"How do we make sure the West Midlands is poised as an alternative to London?", he added.

The Minister said the West Midlands was not very good about marketing itself to the wider world. Birmingham was at the centre of UK medical research and had a growing nanotechnology sector, but had not succeeded in advertising its successes or promoting itself as well as it might.

He also envisages the West Midlands at the centre of service industry back office relocations.

Mr Byrne added: "We are able to deliver complex service industries at a fraction of the cost. There is no reason why the West Midlands should not be competing for some of these big services businesses."

He gave the example of large companies in New York which had relocated parts of their operation to the surrounding countryside "about an hour's train journey away".

"You don't need to be on the doorstep. You don't need to be in the thick of it to deliver services. You can do it at arm's length," said Mr Byrne.

"Ken Livingstone will come to Birmingham some time this year to talk about how London and the West Midlands can work together more closely in competing for global business.

"If we are to really go for it we have to have a different relationship with London."

Warning that the global economic slowdown was bound to hit the region in 2008, he added: "The next three months will be a critical quarter for the West Midlands. There are bound to be knockbacks in the West Midlands but we don't envisage any knock outs because you can't knock this region out."

No one from the city council was available for comment last night.