The London borough is among the 12 projects helping the government to examine what sort of support and structures will best lead to long-term employee-led "mutuals", as part of the wider big society agenda.
The 12 schemes also include Hammersmith & Fulham Council’s children’s services department, youth services in Kensington & Chelsea and a consortium of further education colleges developing an awarding body.
All projects will receive mentoring help from organisations including the John Lewis Partnership, PricewaterhouseCoopers and Tribal. Lord Victor Adebowale of social care organisation Turning Point is also among the people offering to be mentors.
Announcing the pathfinders, Cabinet Office minister Francis Maude said: "I know that across the country there are literally thousands of frontline employees who can see how things can be done better, but at the moment, with the existing constraints, they just can’t get it done. Now this is going to change.
"The potential for public sector staff to spin out is enormously exciting. The new models will show us how we best support mutuals, tackling problems when they first arise, not expensively managing them over many years."
Nickie Aiken, Westminster Council's cabinet member for children and young people, said the scheme could help them deliver more for less.
"Times are increasingly tough for the public sector and with continuing pressures on budgets and falling grants things only look set to get tougher in the coming months.
"If we are to continue to provide excellent services we need to radically review what we do at present and explore how we can do things differently while delivering more for less.
"We believe that this employee-led mutual model could bring significant benefits — from providing better value for money for local taxpayers by reducing overheads to sharing best practice and increasing motivation among staff."
In July, Westminster announced it was merging its education department with Hammersmith & Fulham Council. It also set out its intention to combine the majority of its children’s services with Hammersmith & Fulham by 2013.
