NDC aims to combat poverty-related problems including unemployment

Over the next 10 years, �2bn is being ploughed into England's most deprived areas under the anti-poverty scheme.

And early indications show it could succeed, according to a National Audit Office progress report.

The programme, which aims to involve local people, was hailed as a new approach to tackling poverty when it was launched in 1999.

In the 39 areas the scheme operates in, about 50,000 people have been involved.

Organisations are set up to represent the interests of local people to combat crime, unemployment, low educational performance, poor health and improving the environment.

'Strained relationships'

Although the NAO said encouraging progress had been made, it also highlighted areas of concern including a lack of standardised basic financial reporting arrangements across New Deal partnerships.

It is encouraging that in a short time 39 community partnerships have been established, engaged with residents to develop long-term plans, and started to make significant investments to tackle deprivation National Audit Office

It also reported strained relationships between local partnerships and local authorities.

And it said basic financial and performance data was lacking, hindering partnerships' abilities to display success in delivering aims.

Auditor general, Sir John Bourn, praised the programme's ability to involve local communities.

He said: "It is encouraging that in a short time 39 community partnerships have been established, engaged with residents to develop long-term plans, and started to make significant investments to tackle deprivation.

"This is a new approach to regeneration in England and, while there have been some problems, the office of the deputy prime minister has acted quickly and effectively to address them."

Last October, an independent evaluation of the NDC scheme by researchers from Sheffield Hallam University identified a number of "teething difficulties".