A "revolution" in the way local services are funded that is set to save taxpayers billions of pounds will be pioneered in 14 areas, Eric Pickles said today.
The Local Government Secretary pledged to end the "silo control" that means money is wasted when services are duplicated by different departments and agencies.
Under the Community Budgets scheme, services will pool their funding to save cash and improve efficiency.
Paper research suggests that making savings of 2% through combining staff and changing services could save an area around £1 billion, the Government said.
Mr Pickles said: "We can no longer afford the luxury which left public investment idling to no purpose.
"We need a gear change that makes 'silo control' obsolete and starts a local service revolution that puts people at the heart of spending decisions and saves money.
"We're setting up more Community Budgets than originally intended - these 'pool and save' pioneers can bring about truly local services with one big local cheque that knocks out bureaucratic processes everywhere and upends Whitehall's monopoly over public money that's hemmed in frontline workers for decades."
Greater Manchester, Cheshire West and Chester, West London and Essex will be the key pilots of the scheme.
Ten smaller scale "neighbourhood level" pilots will also be carried out in Cowgate, Kenton Bar and Montague in Newcastle; White City, Kingston, Poplar, Queens Park in London; Ilfracombe in North Devon; Bradford Trident; Sherwood in Tunbridge Wells; Haverhill; and Castle Vale, Shard End and Balsall Heath in Birmingham.
Deputy Prime Minister Nick Clegg said: "The Government is overseeing a fundamental shift in the way Whitehall works - putting power firmly in the hands of local people.
"Community Budgets will give professionals the clout to control how money is spent in their communities.
"They will put local authorities in the driving seat to deliver better services, cut red tape and save millions of pounds of taxpayers' money."
Sir Merrick Cockell, chairman of the Local Government Association, said the pilots represented a "once in a generation opportunity for really radical reform" that puts local communities in control of local services.
He added: "By sharing their resources, funding and expertise through community budgets, councils and the rest of the local public sector can transform services and give local taxpayers a much better deal."