Lord Heseltine has urged the government to boost economic growth by allocating funds to industrial regions outside London.
The former deputy prime minister has urged the coalition to allocate up to £250,000 of new public funding to local enterprise partnerships (LEPs) over the next few years, ending Britain's historic policy of centralisation.
In the government report, entitled No Stone Unturned the Labour Peer said: "Britain's great cities that characterise an earlier generation have been replaced by quangos and central government.
"The country was made by the Liverpools, Birminghams, Newcastles, Manchesters and Leeds - not by London."
Lord Heseltine has argued the government needs a new strategy for growth
Growth funds administered by different government departments should be brought together into a single, multi-billion pound pot for local areas, it was suggested.
Local partnerships should bid for funds from central government for a minimum of five years starting from 2015/16, said Lord Heseltine.
The Conservative peer, who was deputy prime minister under John Major's government, called on Britain to "go on a war footing" to revive the stuttering economy.
He told The Sun: "We have a national crisis. We need to engage the war psychology - that we're all in this together."
He also recommends that local authorities should have a new legal duty to consider economic development and that all two-tier English local authorities outside London should pursue a path towards unitary status.
Lord Heseltine said economic recovery could be risked if the government does not speed up the search for new air capacity in the South East and review immigration regulations. He also called for a more definitive energy policy.
Heseltine urged people to adopt a 'war psychology' to tackle the economy
Business leaders and trade union leaders welcomed the blueprint, in which the peer says: "The message I keep hearing is that the UK does not have a strategy for growth and wealth creation."
Chancellor George Osborne said the report was "bursting with ideas" and added: "we will study it very carefully."
Business Secretary Vince Cable said the root-and-branch review raises a number of important issues.
He added: "Lord Heseltine's findings show where government can improve its performance in delivering better interventions.
"We will now need time to consider its numerous recommendations and will respond in the coming months."
Shadow business secretary Chuka Umunna said "We hope that ministers will take Lord Heseltine's proposals seriously, although the briefing against the report from within government in recent days suggests they are unwilling to listen."
Terry Scuoler, chief executive of EEF, the manufacturers' organisation, said: "This review is a welcome recognition that all parts of government need to get behind companies that are looking to grow to create the stronger economy we need.
"However, with such a wide-ranging review, the government needs to consider its proposals carefully to ensure that they offer value for money and review how they would work in practice.
"We have been here before and it has not worked, the last thing we need is another level of bureaucracy between the employer and the provider."
John Longworth, director general of the British Chambers of Commerce, said: "Lord Heseltine's analysis of the state of the UK economy is compelling. Businesses will welcome his call for steady, long-term thinking to improve the UK's economic performance.
"Yet Heseltine's prescription for action focuses too much on institutions, rather than on the fundamental barriers to business growth.
"Ministers should think carefully before committing to a restructuring of government, and focus first on the key constraints facing the real economy."
Welcoming the report, CBI director-general John Cridland said: "It identifies a wide range of levers capable of promoting growth which the CBI has been calling for for some time, from education to infrastructure, and from planning to access to finance. It is a thoughtful contribution to the growth debate.
"His key point is that we need more local action and leadership, which must be right.
"To successfully rebalance the economy towards private-sector growth, every part of Britain needs to grow - we mustn't just rely on the usual suspects of London and the South East."
A study by The Work Foundation found that many firms are ready to walk away from LEPs unless the government gives them real powers and finance.
Nye Cominetti, the report's author, said: "The government has committed itself to involving business in rebalancing the UK economy through LEPs, but business leaders have been frustrated by the lack of progress.
"There can be no doubt that LEPs face tough challenges - creating private-sector jobs during a recession is no easy task.
"The announcement of core funding is a very welcome move, but if LEPs are to drive growth across the country, they need more power and more funding.
"Our research also identifies problems with under-representation from small and medium sized enterprises.
"This type of company employs the majority of private-sector workers in the UK, so it is essential that SME leaders are brought on board with a view to targeting projects at the needs of smaller businesses.
"These business leaders are also likely to be particularly attuned to the strengths and problems of their areas."