Voters will be given powers to decide how ten of millions of pounds should be spent in their neighbourhood under radical plans being unveiled today.
In a potentially dramatic extension of direct democracy, councils will have to hold ballots before deciding where money should be targeted. It would mean that, for the first time, people could direct cash to areas that concern them most, such as parks, curbing antisocial behaviour, targeting drug trouble spots or cleaning up litter.
The idea comes from Latin America where it is being rapidly adopted. It began in 1989 in the southern Brazilian city of Porto Alegre, but has swept through the region and some of the more radically led cities. Thanks in part to the success of the scheme, the UN has nominated Porto Alegre as the Brazilian city with the "best quality of life".
When Hazel Blears, the new communities secretary, outlines the scheme she will say that she wants every neighbourhood to have control of some of the council's cash within five years.
She told the Guardian that communities will be asked to take control of council budgets through local debates, neighbourhood votes and public town meetings.
She said she may introduce new powers that will give people the right to petition councils. They would then be under an obligation to consider it. She hinted strongly that even these measures were not radical enough.
As a start she will announce 10 national pilot projects, to include Birmingham, Merseyside, Lewisham, Bradford, Salford, Sunderland, Newcastle and Southampton.
In the case of Sunderland the council will set aside £23m of its budget over the next two years for local residents to decide how the money is spent.
Ms Blears said: "In these areas people will be given a direct say on their big mainstream budgets. This is not about small grant-making, such as a community chest of £5,000 to organise a tea party. This is about involving the public in some of the big choices.
"The public will be able to decide whether their priorty is play areas, youth facilities, traffic calming or more community wardens. It will be down to them. The purpose of the pilot projects is to show that this can be done, and you get better decisions. Participatory budgeting is not just consultation. It is where people come together, set priorities and vote on what is going to happen."
She added: "I think the world has changed. I think voting every four years and basically handing over responsibility and power to other people and then doing nothing again for four years, I think our democracy is not like that any more."
The communities department has hired Church Action on Poverty to act as a facilitator to help communities hold discussions on their priorities before a vote.
She admitted there is careful politics in that "councillors must not feel their democratic mandate is bypassed, and instead recognise that it will strengthen their relationship with their local community"
Ms Blears insisted: "My overriding belief is that people are capable of making quite complex difficult decisions, setting priorities, doing trade-offs if they are given the opportunity to do it. I have never believed in a paternalistic society that tells people what is good for them. We are now at a tipping point where there is a political will right across government to devolve power.
My task is to say how and what the practical ways in which we can make this a reality for people."
Ms Blears will also announce small-scale funding for for projects in 20 areas where local authorities are to let communities take ownership of their assets in line with the government's recent Quirk review.