Urban regeneration company New East Manchester is to become a wholly owned subsidiary of Manchester City Council.
NEM said the decision came after the North West Development Agency and Homes & Communities Agency resigned as shareholders.
The arrangement is still in its early stages and at this stage it is "business as usual", NEM said.
Eddie Smith, chief executive of New East Manchester, is expected to stay in his role and most staff at NEM are city council employees.
The company said the council remained committed to the regeneration of east Manchester.
Simon Bate, chairman of New East Manchester, said: "Following New East Manchester's (NEM) Board meeting yesterday, it has been agreed in principle that NEM will become a wholly owned subsidiary of Manchester City Council, who remain firmly committed to the continued regeneration of east Manchester for the long term.
"The company has successfully laid strong foundations over the past decade, and the future regeneration of east Manchester will build upon this, working closely with the city council and other public bodies, local communities and the private sector to encourage development and unlock investment."