The government is preparing to tailor housing policies to take account of regional priorities.
The move, a first for the DTLR, comes as the government prepares to issue its long-awaited white paper on English devolution.

At the formal launch of the Northern Housing Consortium last week, DTLR housing director Michael Gahagan confirmed that the department was considering how to use different policies to address low demand in the north, while easing housing pressures in the south.

Ministers have said they envisage a strategic role for assemblies set up after a successful referendum, but not a role as direct service providers.

The North East Regional Assembly is calling for the power to distribute housing subsidy to councils, using staff transferred from the government offices.

Putting forward its campaign for autonomy, the assembly also called for powers to control the Housing Corporation.

The assembly was the first in England to set out detailed plans which it forwarded to the government last November. It says a model based on the Greater London Assembly would not go far enough in transferring powers.

It wants to control all the region's housing budgets, as well as planning, and take on responsibility for drawing up regional housing investment strategies. European structural funds would also be taken over. Staff from the corporation could be transferred, or the quango asked to fulfil the work under assembly control.

From 1999 to 2000, the Govern-ment Office North East controlled budgets of £530m. The corporation's investment strategy for 2001 involved £23m funding.

A spokesperson for the assembly said: "Many of those working in existing bodies say that, with greater coordination and integration, much more could be achieved for the people of the region. There are now at least a dozen 'regional strategies' to overcome this problem.

"However, even those involved in their production acknowledge that the diversity and multiplicity of participating bodies limits the ability to succeed."