Councils in Merseyside and East Lancashire will be given more power to direct spending on key regeneration programmes after the Government approved the latest round of Multi Area Agreements.
The statutory agreements give groups of local authorities greater freedom to deliver pre-agreed economic plans focused on jobs and skills.
The Liverpool city region's MAA covers the council areas of Liverpool, Knowsley, St Helens, Wirral, Sefton and Halton.
Pennine Lancashire's includes Lancashire, Blackburn with Darwen, Burnley, Hyndburn, Pendle, Ribble Valley and Rossendale Borough Council.
The MAAs were signed by the Prime Minister Gordon Brown and council leaders in Downing Street today. Under the terms of the deal, Central Government devolves some spending controls in ten policy areas including employment, skills, transport, regeneration, housing and planning. In return the councils agree to meet revised targets on reducing unemployment and raising qualifications.
Cllr Ron Round, leader of Knowsley council, is chairman of the Liverpool City Region Cabinet. He said: "In these uncertain economic times, we all recognise the need to support local businesses and help local people find and retain employment. We don't just want to survive the downturn – we want to thrive. We can achieve that by working together to get people into employment and raise the skills levels of our citizens over the coming years to meet the future needs of business in the area."
Greater Manchester's ten authorities signed their MAA in July 2008.