The so-called "single offer" will enable local authorities with a strong track record to negotiate radical new freedoms with government. Some councils will be completely freed from ringfencing, other than the core schools grant and counter terrorism cash.
Single offer councils will be expected to meet higher savings targets than other authorities annually, but they will be able to retain a share of these savings.
Councils that are particularly good at delivering services in one area, but may be weaker in others, will have access to a new "innovative policy offer". This will allow authorities to negotiate devolved responsibility and funding in areas such as health or children's services.
Local authorities and their children's trust partners will also have the chance to trial a new multi-agency Children and Young People's Grant starting in April 2011.
David Parsons, chair of the Local Government Association improvement board, said the changes are an important first step in shifting the relationship between Whitehall and councils. "The removal of some ringfencing around how local councils can spend their money is good news for councils, as are cuts to the burden of inspection, but there is a need to go much further in slashing Whitehall red tape," he said.
"Local areas must have the freedom to design services that better meet the needs of people who live there. Only a radical redesign of how local services are delivered will ensure the savings and benefits of Total Place are fully realised."
Communities Secretary John Denham said Total Place fits public spending around the needs of local people, cutting out waste and duplication while protecting frontline services.
"The new approach takes us way beyond a tinkering at the edges of the way individual local authorities operate, it amounts to a significant and collective shift in the way that public services work from health and social care to policing and children's services," he said.
