Birmingham City Council leader Mike Whitby is to become the city’s acting mayor under radical reforms to local government announced today.

But Birmingham residents will have the chance to decide whether they want to keep a mayoral system or return to the traditional system with a referendum in May 2012.

If they vote “yes”, then direct elections for a city mayor will be held in May 2013.

Although there has been speculation about plans to create city mayors, the Government has now confirmed the details of its plans as it publishes the Localism Bill in the House of Commons.

Existing council leaders in 12 major English cities, including Birmingham and Coventry, will become what the Government are calling “shadow mayors”.

They will have all the powers which existing mayors in other cities such as Middlesbrough already enjoy. For example, they will be able to propose policies without needing to consult senior colleagues in the council cabinet.

But the referendum will ask local residents whether they want to go a stage further and create a powerful mayor who could have control over services such as transport, policing or economic development.

Coun Whitby will become a shadow mayor even though he is a long-standing opponent of city mayors.

Many other councillors from all parties in the city opposed to the creation of a permanent mayor and are likely to campaign for a “no” vote in the referendum.

However, others, such as Labour group leader Sir Albert Bore, will support proposals for a permanent mayor.

Whitehall officials say mayors “will be elected for four year terms and have the status and power to make their city a success” - but full details of the powers they will have are to be explained over the next few months.

A Department for Communities and Local Government source said: “The Localism Bill will herald a ground-breaking shift in power to councils and communities overturning decades of central government control and starting a new era of people power.

“It is the centrepiece of what this Government is trying to do to fundamentally shake up the balance of power in this country. For too long, everything has been controlled from the centre – and look where it’s got us.

“By letting councils and communities run their own affairs we can build a stronger, fairer Britain. It’s the end of the era of big government.”

Other measures in the Bill will devolve more powers from London to local councils, give residents a new right to veto excessive council tax rises through a referendum, allow planning decisions to be made at neighbourhood level, give councils more control over how council housing is allocated and reward councils for helping local employers to succeed.

City council Labour group leader Sir Albert Bore and former Erdington Labour MP Sion Simon are likely to contest the Labour nomination.