Birmingham City Council has been warned it needs to pick up the pace of change over the next two months and show it can deliver a realistic budget if it is to shake off the threat of Government take over.
The Birmingham Independent Improvement Panel, set up last year to monitor the council, has issued the warning in its latest letter to Local Government Secretary Greg Clarke.
While "encouraged" by the approach of new leader John Clancy, the panel says there is still much do, especially its long term financial plan - delivering £250 million cuts by 2020.
The panel is overseeing the council following the damning Kerslake review which found a series of deep-rooted problems with Europe's largest local authority - including an inability to change or deal with cuts effectively, a lack of clear leadership and poor partnerships with outside organisations.
This damning verdict was a key factor in the resignation of council leader Sir Albert Bore in October and Coun Clancy's subsequent election.
Panel chairman and Birmingham businessman John Crabtree said that the council leadership recognised there was still much to do.
He said: "Following the change of council leadership, the panel now expects to see a significant step up in the rate of progress.
"In particular in the next two months, the council will need to be able to demonstrate that the long-term financial strategy is both realistic and deliverable."
Coun Clancy has also been urged not to reshuffle the cabinet before the local elections in May as the panel believes stability, particularly on education and children's services, is vital at this time.
Clancy is known to be keen to bring his own people to the top table but has been praised by the panel for keeping the cabinet he inherited from Sir Albert.
The panel has praised Clancy's public commitment to the improvement plan and his pledge to be more outward looking and leave the day-to-day running of the city council to officers.
In his first month, Coun Clancy has made great efforts to take on a more public facing leadership role - being seen out and about in the city including visiting charities for the homeless over new year.
It warns the council faces a tough task in cutting the workforce and making changes to terms and conditions of staff and a major overhaul of care services for the elderly and disabled.
Coun Clancy welcomed the report, saying he was encouraged by their vote of confidence in his changes.
"It is encouraging the panel is supportive of the inclusive, transparent and collaborative approach that I have outlined and begun to implement since becoming leader of the council," he added.
"There is still more to be done to deliver on the recommendations the panel are monitoring but we are all fully committed to the improvement plan including providing effective leadership with partners."