The Government was today urged to move 20,000 civil service jobs out of London and the South East and axe a further 7,000 posts in a move which could save more than £2 billion.

A report by Sir Michael Lyons said Whitehall departments had identified thousands of jobs that could be relocated and he recommended that the plans should be taken forward ''urgently''.

Sir Michael, director of the Institute of Local Government Studies at Birmingham University, also suggested that London headquarters of civil service departments should be ''radically'' slimmed down.

Ministers were told there should be a strongly enforced presumption against choosing London and the South East for new civil service activities.

''I believe that a new pattern of government service will contribute significantly to the Government's policies for the reform of public services, improving regional growth, national competitiveness and devolution.

''Government needs to take firm action to recast the pattern of its business in a way that better meets the needs of the nation in the new century,'' said Sir Michael.

The report argued that the pattern of Government had to be reshaped, which meant the concentration of public sector activity in and around London was no longer consistent with Government objectives.

The Government would have to take firm action in the coming years to make a significant impact on relocating work to the regions, said the report.

Sir Michael, who was asked last year by Chancellor Gordon Brown and Deputy Prime Minister John Prescott to look into the scope for relocating work out of London and the South East, said 20,000 jobs could move to the regions

More in The Northern Echo tomorrow.