The review of the ODPM that has been ordered by David Miliband, the new communities and local government minister, is designed to pave the way for the reorganisation of John Prescott’s sprawling departmental empire.

The ODPM’s official line is that Miliband is merely “gathering information” about his new job, but Building understands that the work being undertaken by civil servants could have far-reaching consequences.

A source close to the ODPM said the stocktake of Prescott’s department, which covers functions ranging from fire brigades to urban regeneration, was looking at moving local government to the Department for Constitutional Affairs and leaving behind a “slimmed down” housing and planning department. Another source said plans were “well advanced”.

The reorganisation of the department would take effect when the 66-year-old Prescott steps down, which is widely expected to coincide with prime minister Tony Blair’s resignation at some point during Labour’s present term.

The stocktaking exercise follows Blair’s bid to break up Prescott’s department before the general election. This would have created a slimmed-down ODPM with a sharper focus on housing and planning and moved other responsibilities to a new department under former home secretary David Blunkett.