Councils in England are to be graded in league tables as part of local government reforms.

A White Paper will also tackle the complex funding system which critics say leads to an uneven distribution of taxpayers' money.

The annual sum spent by local government in England exceeds �70bn.

They will be graded from best to worst with the results in league tables similar to those employed for schools.

Categories will include failing, coasting, striving and high performing.

Private sector

All authorities will be given new freedoms from bureaucratic controls.

The best will be able to sell services to other councils and the private sector.

There is also expected to be reform of the often impenetrable system of formulae used to work out what money councils receive from central government.

It is also likely there will be a reduction in the use of specific grants, "ring-fenced" funding that does not allow councils any discretion on how money is spent locally.

The government has been criticised for increasing use of these in pursuit of centrally set targets.