Tory leader David Cameron was yesterday blasted over "ludicrous" plans to install an elected mayor to run Newcastle and hand councils greater powers by axing regional organisations.
Regional politicians hit out after Mr Cameron backed plans for US-style mayors in British cities with substantial powers over transport, policing, regeneration and raising cash by issuing bonds and borrowing money.
Under the proposals championed by former Tory Cabinet minister Lord Heseltine, an elected mayor could be installed in the Newcastle "city-region" - the urban centre and surrounding areas - to take strategic decisions without a local referendum, although Sunderland could remain outside if it wanted.
Existing councils would remain and could take control of business rates paid by firms in their first five years and win greater financial freedoms, with £10bn each year of European Union funding going directly to locally-elected politicians.
Regional development agency One NorthEast and the unelected assembly would be axed, along with regeneration quangos.
And the Government's regional office would take a lead on national issues affecting the North-East.
But the proposals came under immediate fire after Lord Heseltine suggested an elected assembly - or a chamber drawn from existing councillors - should be created to "loosely" scrutinise the new mayor.
The idea for another assembly comes despite the overwhelming rejection in a referendum of an elected North-East chamber in 2004.
Former Newcastle Labour council leader Sir Jeremy Beecham, who still sits on the authority, welcomed discussion of issuing bonds but said there was little appetite for elected mayors.
He said creating a new assembly was ludicrous.
Senior Newcastle councillor Greg Stone, a Liberal Democrat, said he was not keen on mayors because of the concentration of power and questioned Tory motivations.
"There is a case for looking at more strategic powers for cities. That is a reasonable debate but I just wonder if this is a desperate attempt to get some power back in cities," said Coun Stone.
One NorthEast chairman Margaret Fay said regional development agencies were accountable and helped lead economic development in cities.
"It is our view that effective economic regeneration is best achieved through a strong partnership between national government, regions and our cities - recognising that each level has an important role to play," she said.
Campaigner Neil Herron said he was flabbergasted, adding: "They will not learn their lesson. We don't need different government, we just need better government - councils with the powers handed back from the regional agenda."
Mr Cameron said he was an enthusiastic supporter of the central reforms, with mayors visibly in charge.