The Local Government Bill, which will also introduce new powers to root out sleaze and corruption, will require town halls to reform structures that have been in place since Victorian times.
However, critics of the Bill attacked it as a "diktat" that gave local authorities or their residents little freedom to decide for themselves how they wanted to run their own affairs.
The Government faces stern opposition not just from the Tories and Liberal Democrats but also from hundreds of Labour councillors across the country.
The Labour Campaign for Open Local Government, which has nearly 1,000 Labour councillors as members, warned that the plans would lead to more decisions being taken in secret. Reporters will be barred from meetings of most cabinets.
At the moment, local authorities are made up of cross-party committees open to the press and public and are run jointly by chief executives and leaders chosen from among the largest political party.
Under the proposals, councils will have to move to one of three new systems of management: a directly-elected mayor with a cabinet, a cabinet with a leader, or a directly-elected mayor with a council manager.
The cabinet system is likely to see senior councillors paid more than pounds 40,000 each, with council leaders earning more than pounds 60,000 for the first time.
Councils that want a directly elected mayor will have to put the idea to a local referendum. Referendums will also be triggered if five per cent or more of the council's electorate present a petition for a mayor, and the Secretary of State for the Environment, Transport and the Regions will also have the power to order a local ballot.
Beverley Hughes, the Local Government Minister, stressed yesterday that the status quo of traditional committee-style council management "will not be an option". "Change is not negotiable," she said.
Ms Hughes dismissed suggestions that the London mayoral race was a poor advertisement for the system, claiming that it had created "enormous potential interest".
But Gerry Harrison, co-ordinator of the Labour Campaign for Open Local Government, said that the Bill represented a "straightjacket" for residents. Voters in Camden, north London,were recently consulted on a mayor or cabinet-style management, andoverwhelming supported the status quo.
Nigel Waterson, the Tory local government spokesman, said that the Bill was an attempt to ensure that Labour "cronies" were given highly-paid posts and greater power. "Labour is bullying councils into change," he said. "Elected mayors should be introduced according to local wishes not imposed by Downing Street diktat."
The Bill also set out new ethical rules for councillors and council employees, with councillors facing disqualification from office for up to five years if they breach new standards. Councils will also be charged with looking after the economic, social and environmental "well-being" of their local areas.
The legislation will also repeal the controversial "Section 28" provision introduced in the 1988 Local Government Act, which prevents councils from promoting homosexuality as a normal way of life.Reuse content