THE North-East will today be offered its own parliament in an historic move giving the region greater control over its own affairs.

And it emerged last night that the new regional assembly will probably be able to raise its own taxes - a sign that it will be more than a mere talking shop.

Cabinet sources told The Northern Echo yesterday that the region will be the first in the country to hold a referendum in 2004, with elections to the new assembly held before the General Election, due in 2005.

Yorkshire and Humberside may also get a referendum before the General Election.

Sources said that in County Durham and North Yorkshire there will have to be a radical overhaul of council structure, with the counties tipped to make way for enhanced districts.

The assembly is likely to be given power to raise its own money through adding a precept to the council tax, in the way that police authorities do today.

This tax-raising power is, though, likely to be tightly controlled, at least in the first few years, "so as not to scare the horses".

John Prescott will present the long-awaited White Paper, called Your Region, Your Choice, which has been drawn up by a policy committee including Darlington MP Alan Milburn, to the House of Commons at lunchtime.

After that, the Deputy Prime Minister will fly to the North-East, accompanied by Regions Secretary Stephen Byers, to explain the plans to businessmen and politicians in Newcastle this evening.

"The assembly will be a voice for the region," said a Labour insider last night. "Its main task will be to make the region better off, to attract jobs and bring prosperity.

"It will take democratic control of our economic development. It will have goals of ending poverty and improving educational skills. People will care about it."

The assembly will have up to 35 elected members, a Cabinet of ten ministers, and a first minister - Joyce Quin, the Gateshead and Washington MP and a long-time enthusiast of regional government, is tipped for the job, but it may also appeal to Hartlepool MP Peter Mandelson.

The assembly is likely to be based in Durham City with its meetings held around the region.

Polls suggest that more than 60 per cent of North-Easterners support the concept of regional government.

But there will be battlegrounds. Durham County Council is likely to fight to save its life. In the mid-1990s there was a bitter scrap between the county and its districts when the Conservative Government asked Sir John Banham to review the council set-up. He allowed Darlington to leave Durham, and split Cleveland into four unitary authorities.

This model now looks likely to be applied to the rest of Durham, with the smaller districts such as Teesdale and Wear Valley being given greater powers at Durham's expense.

However, in its defence, Durham will point to Banham's report that said that because Durham was squeezed between Tyneside and Teesside, it needed a powerful voice of its own.

Banham also said that because of the rural nature of the county, cost-effective services could be best delivered by a large unitary authority rather than a series of smaller ones.

There will be outright opposition to a regional assembly among some Teessiders who fear Geordie dominance. Middlesbrough MP Stuart Bell is against the idea.

The region's most senior Tory, MEP Martin Callanan, said yesterday: "We do not have closed minds on the reform of local government, but I do not believe that adding another layer of politicians is the answer.