Labour is drawing up plans to move tens of thousands of civil servants out of London in a bid to downscale Whitehall and cut public debt.
According to leaked extracts obtained by the Guardian, a government report to be published in two weeks calls for a review into the possibility of relocating over 200,000 officials and employees of 'arms-length organisations' based in the capital and South East.
The Smarter Government Report, to be delivered in time for the Budget, would be based on the idea that only those required for "ministerial support or personal interaction" would remain in the capital.
The plan is intended to support the government's two goals of cutting public spending and boosting localism.
Among its other proposals, the report led by Chief Secretary to the Treasury Liam Byrne, is expected to outline plans to reduce the cost of the civil service.
According to extracts the Treasury wants to reduce the number of senior civil servants, which has grown from 3,100 to 4,100 in the past decade.
And quangos will be closed or merged with departmental back-room operations streamlined.
In response, the Treasury described the story as "speculation" and refused to comment on contents of the review ahead of its publication.
A spokesman added: "Following Sir Michael Lyons' report on relocation in 2004, the government announced plans to relocate 20,000 posts out of London and the South East by March 2010.
"In the Budget, the government announced that 19,000 relocations had already been achieved and as a result the government would increase the target to 24,000 posts by 2010-11."
