The proposal, published yesterday by the Fabian Society, is likely to be seen as an early blueprint for some of the changes Labour might make in government.
The Labour leader has already said he favours the idea of an elected mayor for London, and it is possible that the party would legislate to allow other areas to pick up the idea.
Although there would be no immediate plan to impose mayoral ballots on councils, different areas would be encouraged to experiment so that a gradual reform could take place.
There could be fierce resistance to the idea in many town halls, where councillors fear it would leach away their power and concentrate control in the hands of one person. Research has shown that while more than 70 per cent of the public wanted elected mayors, only 16 per cent of councillors agreed.
The report's authors say their idea could revitalise commun-ities and attract a higher calibre of local politician. One-third of existing councillors are retired and 80 per cent are over 45, but the new-style mayors would have a salary and a small staff.
Elected mayors would have sweeping powers and would oversee the running of the administration as well as proposing the annual budget and community plan. They would be able to choose a small cabinet of council members.
The mayor would be elected on an Alternative Vote system which would ensure that he or she had the support of at least 50 per cent of the electorate. Another of the paper's proposals, less likely to be taken up by Mr Blair, suggests that councillors should be elected by proportional representation.
In London, the mayor would be limited to a maximum of three four-year terms and his or her main role would be to provide a voice for the capital.
The person would also be in charge of transport strategy, land use planning, economic development and public safety.
The new Greater London authority would have only 30 members, three for each Euro-constituency.
The report - written by Margaret Hodge, the Labour MP for Barking and former Islington council leader, with Professor Gerry Stoker, from the University of Strathclyde, and Professor Steve Leach, from De Montfort University - says the idea will make people more proud of their communities. Less than one-third of people voted in the 1996 council elections, it says.
Ms Hodge said that the aim was to find someone who could actively promote their area, and who could act as a focus for civic identity.
"We have had 18 years of local government being pushed around. We aren't going to turn the clock back to the Tammany Hall politics of the Sixties and Seventies, so we need something new," she said.
"People have been arguing about the principle, and this is a first attempt to put flesh on the options."
Glenda Jackson, former actress and Hampstead MP.
Qualifications: Good on transport; adored by the chattering classes.
Margaret Hodge, former Islington council leader, MP for Barking and Dagenham.
Qualifications: Adaptable. Personifies new Labour.
Sir Peter Levene, businessman, millennium project organiser. Qualifications: already in line to be Lord Mayor in 1999.
Tony Banks, MP for Newham North West.
Qualifications: Frequent interventions on London issues seen as longest job application in history.
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