The document, Modernising Local Government Finance discusses a variety of ways that money can be raised. It suggests that partnerships could be set up between local authorities and the business community to devise supplementary business rates that could act as an incentive to regeneration.
Local partnerships, initially to last eight years, could also contribute to long-term investment in an area. Similar schemes were recommended by the urban taskforce, led by Lord Rogers, in its report published last year.
The green paper, which has gone out for consultation, also invites views on freeing up the investment opportunities for local authorities.
Local government minister Hilary Armstrong said this would give local authorities the chance to plan for long-term investment rather than dealing with capital spending only on an annual basis.