Communities secretary Eric Pickles says that he does not want to see Birmingham City Council "broken up" when a review of the authority reports back later this year.
Mr Pickles instead believes the city is the "pride of the nation" and its size and scale has not been properly exploited for the benefit of citizens.
Last month, he appointed former civil service chief Sir Bob Kerslake to carry out a review of the way the city is governed following the Trojan Horse schools scandal and persistent failure of children's social care.
And while agreeing that he is open to any recommendations which come from the Kerslake Review, he wants to see Birmingham succeed on its current scale.
Sir Bob said he would not rule out potentially breaking up the council.
Serving 1.1 million people with a £3.5 billion budget, Birmingham City Council is by far the largest local authority in Europe and is currently at the centre of the debate over the devolution of more powers from government to the major cities.
Mr Pickles said: "I've got no desire to dismantle Birmingham, it's the pride of the nation.
"Birmingham is a massive council, in terms of its economic power it's probably as big as Belgium. It is immense, there are few authorities in the world as big as Birmingham.
"Sometimes, and this is not meant to be critical of anybody, looking from outside I often think Birmingham sees its size and that makes it difficult to be very flexible.
"But, if we turned the telescope around and looked at services that would be interesting.
"You might want to start something in Birmingham small get something good, and scale it up to the whole of Birmingham."
Running alongside the Kerslake Review is the council's own look at internal devolution – passing powers from the city centre to neighbourhoods – prompted by the petition from 10,000 Sutton Coldfield residents calling for greater autonomy and a town council. This is something else Mr Pickles is following with interest.
"I know Albert (Bore) seems very keen to devolve powers down much more locally. I'm interested in that," he said. "It's all with the spirit of inter party co-operation."
Last week Sir Bob Kerslake said that he is considering all options for the future direction of Birmingham City Council.
While last year, in a scathing attack on Birmingham, Ofsted chief inspector Sir Michael Wilshaw suggested the authority be broken up into three or four smaller districts, blaming the scale for its failure to adequately safeguard children in care.
While the Secretary of State's tone was conciliatory and collaborative on these questions of governance, the mood was more combative on the subject of council funding and the cuts which are being blamed by Birmingham for the likely loss of 6,000 jobs and closure of services over the next four years.
He said: "Birmingham receives an enormous amount of money from government and will continue to do so."
Mr Pickles spoke as he officially opened Two Snowhill, the office block which is now home to the headquarters for the HS2 project.
After stalling during the recession this part of the Snow Hill development has been completed under the Enterprise Zone initiative, run by the Greater Birmingham and Solihull Local Enterprise Partnership.
He said: "This is just what we wanted to achieve with the enterprise zones, we have a magnificent new office development here with the Metro extension right outside."