OXFORD could gain control of services from Whitehall if it wins a bid to sign a new “city deal”.

Councils in central Oxfordshire have been invited to compete for the deal, which could see more spending powers in areas such as transport and planning given to the local authorities.

In exchange, politicians will have to show stronger governance and growth in the area, and greater private sector input.

In a joint statement, Oxford City Council leader Bob Price and county council leader Ian Hudspeth said: “We welcome this opportunity to make proposals to Government that will devolve powers and funding to local communities.

“Maintaining the vitality of the Oxfordshire economy is vital for the future of our communities and will make a major contribution to national economic regeneration.”

Deputy Prime Minster Nick Clegg said: “The deals are unlocking the huge potential of our cities so they can go for growth.”

The announcement was welcomed by opposition councillors in the county, who have called for powers to be used to build more homes and improve transport links in Oxford.

Jean Fooks, a Lib Dem county councillor and leader of the party on the city council, said: “Oxford will clearly have to work very closely with the neighbouring districts and the county council, which will be challenging but highly worth it.

“There are two areas we could do with investment in, housing and transport. “We have awful congestion on the A34 and at the roundabouts on the A40 in North Oxford.”