It is calling on councils to develop locally-led proposals to deliver more new towns and economic growth opportunities on the scale of Canary Wharf or Milton Keynes and will allocate £10m to help draw up plans.
Canary Wharf veteran developer Sir George Iacobescu will advise the Housing Secretary on which projects to take forward for further government support.
In the future, development corporations could also be used on a smaller scale – and used to plan high street and town centre redevelopments as consumer trends change.
To trailblaze the initiative, the housing minister will establish the first new development corporation at Toton, which will be led by the former chairman of Burberry, Sir John Peace.
Located close to the M1 and East Midlands Airport, civic leaders in the East Midlands want to maximise the area’s international links to create tens of thousands of new jobs and new homes needed – including exploring the potential for a new freeport.
Housing Secretary Robert Jenrick said: “We want to drive economic growth outside London and the South East.
“Our new development corporations will empower local areas to come forward with ideas for new towns that deliver jobs, houses and economic growth – creating the future Canary Wharfs of the North and Milton Keynes’s of the Midlands.
“That’s why I am announcing this competition to find major growth opportunities that will receive government support and investment.”
Up to 10 local areas will receive money to help them make the case to government for development corporations which could deliver thousands of new homes for local people.
Sir George Iacobescu, CEO of Canary Wharf Group, Champion of New Development Corporation Competition, said: “Thirty years ago, development corporations breathed new life and energy into towns and cities across Britain.
This New Development Corporation Competition will be a chance for local areas to promote their plans for delivering the Milton Keynes’s and Canary Wharf’s of the 21st century.
“I would like to encourage local authorities and their private sector partners to come forward with ambitious programmes and ideas.”