Trusts in deprived areas to help to attract funding and co-ordinate regeneration by identifying local skills and bringing residents and organisations together.
An army of 150,000 volunteers to work on community projects is one of the key proposals to help educate young people in life skills and make them more employable.
The national scheme, known as Citizens' Service, would be aimed mainly at the 1 million unemployed people aged from 16 to 25.
Volunteers would receive pounds 50 a week - about pounds 10 more than unemployment benefit - plus expenses for travel and food. They would work in areas such as education, health and local authorities, conservation and regeneration projects, and in support roles with charities and the police.
Although the scheme is similar to some previous community programmes, as well as the Government's existing Community Action programme, it is far more ambitious. Rather than concentrating on getting the jobless back to work, Citizens' Service is also intended to advance young people's social, personal and educational skills.
Analysts believe that if it is to be successfully introduced, Labour - assuming that the party wins power - will have to be prepared to fund what could be an expensive programme. The cost is estimated at more than pounds 600m a year, but about half of that would be recouped through savings in benefits. Early indications are that Labour would pay that price for the social gains.
David Blunkett, Labour's education spokesman, said yesterday that he would like the voluntary service made available to 250,000 people within about three years of it being set up. The Labour leader, Tony Blair, has also endorsed the commission's proposal.
The report by the commission said that something had to be done urgently to tackle the problem of the young unemployed. 'If the most enduring adolescent experience is one of exclusion and alienation, a tinder-box of resentment is created.'
The report emphasised that the programme had to be a voluntary scheme that did not replace jobs. 'Citizens' Service is not a form of National Service by the back door,' it said. Nevertheless, the proposals are viewed with suspicion by some trade unionists and left-wing MPs, who fear volunteers will be used as cheap labour.
As a safeguard, the report suggested drawing up agreements with unions and employers before volunteers are used in a workplace, as already happens on some existing schemes.
Citizens' Service would employ more than twice the number of people working on the Government's Community Action programme, which also pays about pounds 10 more than unemployment benefit. People out of work for more than a year can volunteer for Community Action, the primary aim of which is to get them back to work. This is where Citizens' Service differs. One of the commission's main recommendations is to mix employed volunteers with the jobless.
Participants should include young employees seconded by their employers, students between school and further education and people who are unemployed.
They would work from three to nine months and afterwards would receive credits to pay for university grants, accommodation or new skills, such as driving lessons.
The commission suggested extending existing volunteer schemes run by charities such as Community Service Volunteers and the Prince's Trust Volunteers.