Gordon Brown, the Chancellor, said he wanted to increase the number of "risk takers" and entrepreneurs in a bid to boost employment and improve productivity throughout industry.
Lord Trotman must report by the end of the year on issues such as tax and public spending and his ideas could be included in next March's Budget.
Business organisations gave the initiative a cautious welcome but said the Government had already placed a weight of new burdens in the form of regulations such as the National Minimum Wage.
Mr Brown said the Government wanted more enterprise, more investment, innovation and competition. "Instead of the low investment Britain we inherited, I want a high investment Britain where we reward enterprise and encourage the entrepreneurship of the many.
"The Government places great store by creating the right environment in which enterprises can invest, raise finance and grow."
The review will look at the impact of the Government's three Budgets and take account of the competitiveness White Paper and the Small Businesses Service that was launched this week.
The measures were announced at a London conference organised jointly by the Department of Trade and Industry and the US Embassy to help foster entrepreneurs.
Tim Melville-Ross, director-general of the Institute of Directors, said he welcomed such moves by the Government, but added: "On the other hand the Government keeps piling on regulation after regulation which they don't exempt small business from."
Tim Redman, head of research at the Forum of Private Business, said: "Our concern is whether this review will simply look at the impact of tax or whether it will look at the issues that lead up to tax such as small business recruitment and the whole philosophy of entrepreneurship."
Stephen Alambritis of the Federation of Small Businesses welcomed the import of an American business culture. "A business person that wants to build a business for job creation and invest their own money should get a tax break."
Mr Brown's initiative came as a report claimed just 16 per cent of Britons believed there were good short-term opportunities for starting up a business.Reuse content