Birmingham has been urged to reconsider appointing a directly-elected mayor.
But radical plans to create powerful city regions appeared to have been abandoned, when the Government yesterday published long-awaited proposals to reform local government. Instead, a second review has been ordered, reporting to Gordon Brown.
It followed reports that the Chancellor has been blocking plans for elected mayors and city regions which are supported by Tony Blair.
Birmingham City Council has already rejected the idea of a mayor, in a vote backed by the Conservative and Liberal Democrat groups.
But Local Government Minister Phil Woolas urged the authority to think again. He said: "I’m not convinced that the executive arrangements in Birmingham at the moment are strong enough."
The Local Government White Paper presented three options for local government reform which councils will be told to choose from.
They include:n a directly-elected mayorn direct elections for a council leader and cabinetn a system similar to the current one but in which council leaders serve a full four years instead of being re-appointed every year
Choosing a mayor would help Birmingham receive extra funding and more control over issues such as transport and economic development, Mr Woolas said.
He stressed that Government would not force a mayor on the city and the council could look at other options.
But he predicted every major city would have a mayor eventually because local residents would demand one. "I believe we are putting in place an evolutionary approach which will lead in ten or 15 years time to a mayoral model being the norm."
However, proposals for powerful city regions covering areas such as the West Midlands appeared to have been drastically scaled down.
Officials said city regions would have the power to raise money by selling bonds to private investors.
However, the White Paper itself contained no firm details of the extra powers a city region could receive. Instead, a review has been set up to look into how much power can be devolved to city regions. It will report to the Chancellor next year.
The arrangement is a long way from the ambitious plans for city regions with extensive powers first set out by David Miliband last year when he was Local Government Minister. It appeared to confirm reports that Mr Brown had blocked radical plans for the reform of local government.
The Chancellor is said to be concerned that city regions would undermine the work of larger regional bodies such as Advantage West Midlands.
Councils will also be invited to change to a new system in which the entire council is elected in one go, every four years.
At the moment, Birmingham and many other authorities hold frequent elections for one third of the council.
Sir Albert Bore, leader of the Labour Group on Birmingham City Council and a former council leader, said the council must now let the public decide whether to adopt a mayor or one of the other options in a public referendum.
He said: "This is a matter for the people of Birmingham and not just 120 councillors."
But MP Khalid Mahmood (Lab Perry Barr) warned against giving too much power to one person.
He said: "Where mayors have been introduced so far, they have not been a great success. We need to make councils and councillors more accountable, and I think creating a mayor does the opposite."
Shadow Local Government Secretary Caroline Spelman (Con Meriden) asked: "What will this White Paper do for people worried about how to pay for care in old age? Or people struggling to pay the council tax, or who desperately want a say about new housing plans?"
She called the plans "a fudge between the Prime Minister’s stated preference for directly-elected mayors and the Chancellor’s opposition to them".