The scheme is part of the government-backed pathfinder initiative, designed to step in where the housing market has failed to provide a solution. Merseyside is one of nine national housing market restructuring pathfinders.
The government has allocated £500m to the pathfinders up to 2006. This is expected to be supplemented by regeneration body English Partnerships and regional development agencies.
In the report, Liverpool council estimates that of the 76,000 homes in the inner city areas identified for improvement, about 18,000 properties are beyond repair in the long term. The council plans to demolish 7000 houses.
The council is looking for private sector development partners to draw up detailed masterplans for the four areas identified, to establish the scale, phasing and scope of the redevelopment sites.
The report acknowledges that the council faces a big task but says: "The restructuring of the housing market within Liverpool's inner core is a huge task but the opportunities are equally enormous."
Housebuilder Lovell has confirmed that it is pursuing the scheme with developers Countryside Properties. Urban Splash is also expected to enter a bid.
The four inner-city districts selected for renewal in the council report are City Centre North, Stanley Park, Wavertree and City Centre South.