The House of Lords should move to Birmingham or Manchester to show the Government is serious about closing the north-south divide and transferring power from London, a senior Labour figure has urged.

The suggestion has been put forward by Schools Minister Lord Adonis, who is a former Number 10 policy adviser and remains close to the Prime Minister.

Lord Adonis said he believed the reform of the Lords, which will soon become fully elected, was the right time to consider relocating the historic chamber from the banks of the Thames to "one of England's great regional cities".

He considers Birmingham and Manchester to be the two most obvious candidates.

In an article in Prospect magazine, Lord Adonis, who stressed he was writing in a personal capacity, was sharply critical of the concentration of political, economic and state power in London and the failure to embrace decentralisation.

No other capital in Europe, even Paris, was as dominant as London, he argued.

"There is a strong case for locating the elected Lords in one of England's great regional cities," he added. "This would symbolise and promote a redistribution of political power not only beyond England, but also within England, and if the location were to be in the Midlands or the north, it would help counter the north-south divide.

"Manchester or Birmingham – the strongest of the obvious contenders – would be closer to the constituencies and homes of most of those elected as members of the new chamber."

His suggestion was backed by Lord Corbett, a former Birmingham MP, who said the recently refurbished Birmingham Town Hall would make an excellent new home for the House of Lords.

Lord Corbett said: "It would do their lordships a world of good to get out of London, come to Birmingham and enjoy all of the wonderful attractions and countryside that we have. It would broaden their minds."

Lord Adonis said when reformers talked of decentralising power, they mostly took it for granted all Britain's central political institutions would remain in London.

"Virtually no consideration was given, for example, to locating the new supreme court outside of London. I recall only one Ministerial conversation on the subject while I was at Number 10. The idea was swiftly dismissed on the grounds – I paraphrase – that it was unlikely to be well received by the judges and barristers who reside in London."

Lord Adonis said, as a junior Minister in the Lords, he would see no difficulty in operating from Birmingham or Manchester. He believed it would be "a good thing" for there to be a group of public service Ministers whose offices were outside of London and away from the South East.

His suggestion fits in with the findings of an inquiry by former Birmingham City Council chief executive Sir Michael Lyons, which recommended a number of Government departments should be moved from Whitehall to large English cities. Sir Michael argued the relocation of thousands of civil servants would boost regional economies.

Lord Adonis added: "As for civil servants Manchester or Birmingham are closer than London for a growing proportion of senior officials and agency executives."

The Lords' existing office space in the Palace of Westminster could be taken by the Supreme Court, which would not then need its expensive new home in Middlesex Guildhall on Parliament Square, Lord Adonis argued. The Lords chamber would continue to be the set-piece for the state opening of parliament, but for the rest of the year would make a "splendid centrepiece" for a visitors' centre for parliament.

Birmingham, however, would face tough competition in any attempt to woo the Lords.

Lord Adonis makes it clear he sees Manchester's Salford Quays development as the favoured location.