Unless the public backs the no-change option in a referendum, all councils will establish one of three models: a directly elected mayor with a cabinet, a directly elected mayor with a council manager, or a cabinet with a leader.
Deputy prime minister John Prescott said the changes would overhaul structures which had remained largely unchanged for 150 years.
'Everywhere people will be able to choose new forms of local governance, with strong leadership for communities, powerful roles for all councillors and high standards of conduct,' he said.
The government intends to introduce legislation 'so that communities can have the leadership they want and need', according to the paper explaining the Bill, Local leadership, local choice.
Every council would have to consult its community about how it is to be governed. A range of options for new political structures needs to be offered.
Councils will not be allowed 'simply to choose which is most convenient for it'.
If the council wants a directly elected mayor, or 5% of the electorate petition for a referendum on one, then the council will have to hold a binding referendum. The government will have the right to stipulate how the referendum is conducted.
The mayor could operate with a cabinet, or with a council manager to develop policy and possibly appoint chief officers. Mayors would be elected by the supplementary vote system, which allows a second preference.
Even if the mayor option is not pursued, the government expects councils to establish a cabinet.
Councils will only be allowed to keep the existing system if a referendum rejects alternatives. If one is not held the government will 'require that council to hold a referendum on a question determined by the secretary of state'.
Once a council has decided its structure, it will set this out in a constitution.
The Local Government Association is concerned that the government is getting bogged down in prescriptive detail. For example, it intends to specify the content of constitutions, including 'basic requirements as to political and officer positions, roles and relationships'.
Cabinets would usually be formed by a ruling party or coalition. The mayor or leader would generally establish the cabinet, and could change its structure or membership at any time.
The cabinet is limited to 10 members or 15% of the council, whichever is smaller.
Mayors would have the power to delay a decision of a committee or full council, and ask the full council to reconsider the issue.
Scrutiny committees of backbenchers, open to the public, will have the right to question executive members, and make decisions independently of the executive's wishes.
Each council will be required to have a standards committee with at least one non-councillor on it to oversee ethical issues.
A new independent body, the standards board, will investigate alleged breaches of the councillors' code of conduct, operating through regional panels. As LGC revealed last week, it will have the power to disqualify a councillor for up to five years.
LGA chief executive Brian Briscoe welcomed the opportunity to comment on draft legislation. 'There is a degree of prescription which would almost put us in a strait-jacket which may not fit some models that will come forward. We will be looking for some discretion in the final Bill. It is important that the legislation succeeds.'
Consultation continues until May, and legislation will be tabled 'as soon as time allows'. It is unlikely to become law before 2000.