The government said yesterday it would help to pay for Oldham's recovery from last month's race riots, which left 400 businesses damaged by violent clashes.
The Home Office minister Angela Eagle said she would be drawing up an action plan over the next four months but said the area's problems could not be solved by a "diktat from Whitehall".
She said the Home Office would help to plan the future with "both administrative money and assistance".
However, she stressed that the lead had to come from the community.
After a visit to the area to meet councillors, business leaders and community groups, Ms Eagle acknowledged concerns over the strong showing of the British National Party at the general election.
"It certainly ought to worry every peace-loving democrat and clearly it is in nobody's interests for the politics of race hatred to flourish and we have got to do our best to drive them back to the margins of British politics where they belong," she said.
"If you have people preaching race hatred, you have to ensure that local communities can respond to that in a calm, cool and collected manner."
The chief executive of the town's chamber of commerce, Ed Stacey, said businesses in Oldham had been hit hard by the rioting.
Figures showed that the number of visitors to the town centre was down by one third and damaged the town's hopes of being a tourist venue during next year's Commonwealth Games in Manchester.
Mr Stacey said: "What is serious is the damage to Oldham's reputation. The town will continue to suffer as long as this goes on."Reuse content