Oxford City Council is prepared to spend up to £200,000 in its continued quest to become a unitary council.

The prospect of a wholesale reorganisation of local government in Oxfordshire looked remote after the Government gave councils only until January 25 next year to submit plans.

But the city council is investigating whether it is financially feasible for it to take charge of all key services.

The Government has warned that any new unitary councils would have to deliver value for money. They would also have to be self-financing, with the cost recovered within five years.

The city council is preparing to take on consultants to establish the cost of creating a new unitary and examine whether services could be provided more efficiently, including education, social services and highways, which would be taken over from the county council.

A report to Monday's executive meeting recommends the council gets on with preliminary work, in the hope of proceeding by the end of January.

The council leader, Liberal Democrat John Goddard, said the first step was to see whether it could meet the Government's criteria.

He said: "If it looks as though we have a chance, we shall go ahead.

"Deciding whether it is possible to cover the transitional costs in a five-year period is going to require a great deal of detailed work."

Councillors will be told that a report by Prof Michael Chisholm calculates the transition cost could be more than £17m.

With no other councils in Oxfordshire interested, the city is also faced with producing a blueprint for reorganisation of the whole county.

Keith Mitchell, the Conservative leader of Oxfordshire County Council, said: "This seems a great deal of money for a council, constrained in its budget, to be spending."

Options for change

* TURN Oxford City Council into a unitary council, responsible for providing all major services. A two-tier structure would remain for the rest of the county.

* SCRAP Oxfordshire County Council and create three unitary councils - Oxford City Council; a South Oxfordshire council (combining the current Vale of White Horse and South Oxfordshire district councils); and a North Oxfordshire council (combining the Cherwell and West Oxfordshire districts).

* ABOLISH Oxfordshire County Council and the districts to create two unitary councils, one for the city and one for the rest of Oxfordshire.