Close allies of Gordon Brown will today come out against the Government's plans for city regions based around cities such as Birmingham.
Treasury Ministers Ed Balls and John Healey, both of whom are close to the Chancellor, say they are "very sceptical" about the prospect of city regions with their own leadership.
The comments, in a detailed report published today by think-tank the New Local Government Network, suggest Mr Brown could scrap the Government's city regions policy if he becomes Prime Minister.
Mr Balls is seen as Mr Brown's right-hand man at Westminster. Before becoming an MP he was the Chancellor's adviser and spokesman. The paper warns that creating city regions could lead to "a return to the old local antagonism" between big cities such as Birmingham and neighbouring towns and cites.
It also claims city regions would weaken Regional Development Agencies such as Advantage West Midlands, which are responsible for economic development. It warns: "The losers would be the cities themselves - and also the smaller towns and cities who have benefited greatly."
The paper is presented as a response to a report published by another think tank, the Institute for Public Policy Research, in February. That report said Birmingham should head a West Midlands city region with responsibility for economic development, regeneration, transport and skills, under the leadership of a powerful directlyelected mayor.
But the proposals have been accepted by the Government, and today's report in practice is a repudiation of current Government policy.
In an interview with The Birmingham Post last month, Local Government Minister Phil Woolas said Birmingham and neighbouring councils could receive extensive new powers to run their own affairs if they accepted the need for a strong leader such as a mayor.
But this approach is explicitly rejected in today's report, which was written by Mr Balls, Mr Healey and fellow author Chris Leslie.
They say it is wrong to use the success of Ken Livingstone as London mayor as a model for other parts of the country.
"In our view, the success of the elected London mayor cannot be easily replicated within the English regions or imposed on city regions."
They warn: "We do need new powers for local government in economic development - including for the London mayor - and greater encouragement for cities like Manchester or Birmingham to under-stand their wider regional responsibilities. But we must make sure this does not happen at the expense of the rest of the North-west or exclude towns and cities across the West Midlands."
They argue that federations of existing local authority leaders could play a greater role holding regional development agencies to account. But MPs could also be given a bigger role, they say.
Regions such as the West Midlands could have their own Commons Select Committee, meeting either at Westminster or in the region itself.