Chancellor George Osborne has told Birmingham it must agree to create a directly elected mayor if it wants hundreds of millions of pounds for housing, public transport and more.
And the Chancellor said this must be a 'metro-mayor' who would cover more than one local authority.
This could include Black Country authorities such as Dudley and Walsall as well as Birmingham and possibly Solihull.
The idea was backed by Birmingham's business leaders with Birmingham Chamber of Commerce predicting a mayor would give the region a financial boost.
But it comes just three years after Birmingham voters rejected the idea of a mayor in a city-wide referendum.
In his first speech since the Conservative General Election victory, Mr Osborne is saying: "With these new powers for cities must come new city-wide elected mayors who work with local councils."
He said the Queen's Speech, delivered by the Queen in Parliament on May 27 and setting out the Government's plans for the next year, would include details of new laws to hand powers to councils which agreed to his conditions.
He also confirmed the Government would press ahead with plans to hand powers to Greater Manchester, which includes Manchester itself and nine neighbouring councils, including control of a £300 million housing fund and a £1.5 billion transport fund.
This will allow it to build new tram lines, bus lanes and more but was granted only after Greater Manchester agreed to create a mayor. The offer has gone out to all major cities, such as Newcastle, Leeds and Liverpool as well as Birmingham.
It comes as senior councillors from ten "core cities" across the UK including Birmingham attend a conference in London to urge the Government to hand them greater powers.
Coun John Cotton, Birmingham's Cabinet Member for Health and Wellbeing, is representing Birmingham at the event, near the House of Commons in Westminster.
And city council leader Sir Albert Bore has signed a letter to the Government and opposition parties saying cities like Birmingham "must be freed from unnecessary central controls" in order to reach their full potential for creating jobs and economic growth.
However, Mr Osborne's demand that Birmingham create a mayor if it wants more freedom is likely to be met by resistance from councillors.
Birmingham held a referendum on whether to create a mayor to replace the council leader in 2012 but rejected the idea, with 58 per cent of voters opposing it.
Mr Osborne now wants councils to create mayors without a referendum but, rather than replacing existing council leaders, the mayor would run a new combined authority which would include Birmingham and neighbouring councils.
Speaking in Manchester, Mr Osborne is saying: "The old model of trying to run everything in our country from the centre of London is broken.
"I can tell you we will go much further and deliver radical devolution to the great cities of England. I say to these cities: it is time for you to take control of your own affairs. So a central part of our Queen's speech will be a bill to enable a radical new model of city government.
"Here's the deal. We will hand power from the centre to cities to give you greater control over your local transport, housing, skills and healthcare. And we'll give the levers you need to grow your local economy and make sure local people keep the rewards.
"But it's right people have a single point of accountability: someone they elect who takes the decisions and carries the can.
"So with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone. But nor will I settle for less.
"London has a Mayor. Greater Manchester has agreed to have a mayor as part of our Northern Powerhouse and this new law will make that happen. My door now is open to any other major city who wants to take this bold step into the future."
Greater Birmingham Chambers of Commerce said it was essential West Midlands councils came together to "grab this tremendous opportunity".
President Greg Lowson said: "We urge them to think carefully about the added value of having an elected mayor.
"The Chancellor has made it abundantly clear only cities that have an elected mayor will be given control of local transport, housing and skills.
"Birmingham's electorate rejected the idea of an elected mayor for the city alone, as Manchester did, but a mayor could unlock even more resources for a combined authority."
Mr Osborne also said the Government would commit more funding to developing the economy of the north of England, which he calls the Northern Powerhouse.
This includes Manchester, Liverpool, Newcastle, Leeds and the surrounding areas but not Birmingham and the Midlands, suggesting the Midlands needs to do more to convince central government it should receive investment.
Labour's Shadow Chancellor Chris Leslie MP said: "Labour supports genuine devolution to all parts of England, as well as to Scotland, Wales and Northern Ireland.
"But communities have heard promises before and they will be no clearer today about looming decisions on funding.
"Devolution needs to be part of a UK-wide plan not a series of one-off deals done by the Chancellor. The Government's piecemeal approach threatens to leave many areas behind.
"In the last parliament, the most deprived communities were hit the hardest and the North had bigger reductions to local government budgets than in the rest of the country."