REGIONAL assembly rallying cry. Deputy Prime Minister John Prescott last night issued a rallying cry to the North-East to lead the country by voting for a new regional assembly.

Hours after delivering his long-awaited White Paper on regional devolution to the House of Commons, Mr Prescott flew to Newcastle and told an audience of businessmen and politicians: "If you in the North-East show the way, others will follow.

"That will not be new because the North-East always leads the way, but now you've got to get on with it and win the referendum and show that people want and are entitled to a say in decisions that affect their lives."

The White Paper on regional devolution promised far-reaching powers to give genuine Home Rule to the North-East and other regions in a fundamental shake-up of local government.

And, in an historic move exclusively predicted in The Northern Echo yesterday, the assembly will have the power to raise taxes - more powerful than even the most ardent campaigners had hoped for.

Last night, Mr Prescott was flanked at the meeting at the International Centre For Life by Regions Secretary Stephen Byers who said: "This region in particular has been waiting generations for the opportunity of taking control of its own destiny and this White Paper now provides that opportunity."

The "mini-parliaments" could be up and running within four years with a referendum in two years, and yesterday came the strongest indication yet the assembly would be based in Durham City with meetings held across the region.

Mr Prescott said the assemblies would have "real power and funding to improve the quality of life of people in their region, particularly by improving regional economic performance".

The assemblies would have responsibilities to oversee economic development, housing, sport, culture and tourism, planning and public health.

Tony Flynn, chairman of the North East Assembly campaigning group, admitted they had been given more powers than they expected.

"I believe there are enough powers here to make a difference to people's lives in the North-East and I think people will vote on that basis," he said.

The tax-raising powers could see about 5p a week rise on a Band D council tax household to be spent on the assembly's projects.

The assembly, which will cost £20m a year to run, will have a budget of £350m, funded by central government, and the power to influence how a further £500m is spent.

Each assembly will have between 25 and 35 elected members. They will have a leader and cabinet of up to six members.

Joyce Quin, Gateshead and Washington MP, is widely tipped to become the North-East Assembly's First Minister after Peter Mandelson rejected speculation he would stand.

The Hartlepool MP said: "It can only be a good thing that regional government will take a lot of power that is currently in the hands of unelected bureaucrats and hand it to people in Hartlepool and across the North-East."

But the radical overhaul opens the door for a battle between district and county authorities over who will make way for the new tier of government. This will be decided by an independent Boundary Committee ahead of the referendum.

Ken Manton, leader of Durham County Council, said the council would press for a single County Durham Unitary Council - a proposal that would meet fierce resistance from the existing seven district and borough councils.

"With a regional assembly likely to be drawn towards more urban, inner city issues, County Durham, as a large rural county, will need a strong voice," said Coun Manton.

Middlesbrough Labour MP Stuart Bell gave a cautious welcome to the plans but expressed concerns about the future of Durham and Northumberland County Councils.

"We do not want to see people more remote from Government than they feel already," he said.