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The government is consulting with local authorities on the scheme which will require property owners wishing to rent out homes to obtain a licence from the town hall in areas where private landlords are perceived as a problem.

Under the scheme the local authority will have the right to designate areas where only licensed landlords will be allowed to operate. Strict codes of practice will be attached to licenses which could be revoked if conditions are breached.

The new regulations are intended to help communities in areas where the council owns few properties and therefore has little direct control over housing conditions and tenancy agreements.

Areas typified by old-fashioned terraced streets, such as parts of Lightbowne and Cheetham, have suffered for years from a lack of demand which has forced down property values. In many cases homes have been taken over by unscrupulous landlords who have failed to maintain properties or to control tenants' unsocial behaviour.

Similar problems have affected once-affluent areas such as Crumpsall where large Victorian properties have been converted into flats and private landlords have taken over hard-to-sell homes. The new measures are aimed at stopping the rot and preventing otherwise thriving communities from falling into decline.

Manchester City Council has until January 11 to respond to the government's proposals but the scheme is unlikely to be in place before spring 2004.

In its draft response to the government Manchester City Council states: "There is a problem with the way that private letting tends to operate in low-demand areas. This is very much the experience of existing residents in areas of the city such as north and east Manchester.

"Residents believe that if we do not licence landlords as soon as possible in areas of low demand then regeneration programmes are in danger of failing the communities we intend to support."