Parts of England are to be given the chance to set up mini-parliaments as part of major shake-up of regional structures, the Government announced today.

Deputy Prime Minister John Prescott said people in areas keen for a devolved assembly could be able to vote for it in a referendum by the end of this Parliament.

He told MPs the new bodies, which would have extensive tax-raising powers and could control multi-million pound budgets, could replace county councils in some areas if local people approved.

Unveiling the 'Your Region, Your Choice' White Paper, he said they would have responsibility in areas such as economic development and regeneration, planning, transport, housing and culture.

Extra powers are also to be given to existing Regional Development Agencies, regional chambers and Government offices in the regions, he said.

Mr Prescott told the Commons: ''We believe that Britain as a whole cannot achieve its full potential unless all of our regions share in success and drive that success.

''Opponents of these proposals must answer this question: if devolution is good enough for the Scottish and the Welsh, why would they deny that choice to the people of England?''

Mr Prescott said there was a ''strong and growing demand in some regions to have a democratic voice and a greater say over their own future''.

''The people of the English regions should rightly have the same choice that we gave to the people of Scotland, Wales and London''. He believed that once one referendum had come out in favour of a regional assembly then other areas would follow.

Setting out the powers of the new bodies, Mr Prescott said they would have ''real power and funding to improve the quality of life of people in their region, particularly by improving regional economic performance''.

Half a percentage point improvement in growth in the worst performing regions would increase the nation's wealth by £20 billion in 10 years.

''They will allocate funding for economic development, housing, tourism, arts and sport and they will be responsible for the Regional Development Agencies appointing the board and approving the regional economic strategy.''

They would be funded primarily by Government grant, with ''complete freedom'' to spend it towards Government-agreed targets and would have power to raise funds through a precept on council tax and by borrowing, he said.

On current expenditure, regional budgets would be around £350 million a year for the north east and £730 million for the north west two of the most vocal regions in favour of devolved administration. They regions, based on existing boundaries, would also influence the spending of billions of pounds of central Government funding, he added.

The Deputy Prime Minister said the assemblies would have between 25 and 35 members and be elected by the additional member system used for the devolved administrations in Scotland, Wales and London. They would also be encouraged to make use of the experience and skills of other people in the region, he said.

He told the House that where the creation of a regional assembly would leave an area with three tiers of local government regional, county and district, a review of the structures would take place before a referendum took place.

But he made clear that the Government believed that in such cases ''it would be more efficient and simple if we moved to a fully unitary system''.

That would effectively mean abolishing either the county or district councils in the affected region.

''I should emphasise that these reviews will only take place in those regions where a referendum will be held and any restructuring ... would take place only if there was a 'yes' vote in that referendum,'' he added.

Outlining the timetable for implementing the proposals, he said the Government would consult with all regions before deciding which should hold the first referendum.

Secretary of State for the Regions Stephen Byers would talk to local bodies to judge whether there was sufficient support to justify a referendum.

Once a region had voted for an elected assembly, the Government would introduce legislation to enable them to be set up possibly in time for them to be up and running earlier in the next Parliament.