The proposal, was agreed at the LGA's general assembly in Bournemouth yesterday. It came in an amendment to a motion by Greenwich LBC.
The agency will be independent and politically neutral, with business, academic and voluntary sector involvement.
The aim is to improve the performance of council services across the board, particularly focusing on assisting authorities to join the top ten or 20% of authorities which have made giant leaps forward in providing best value services.
LGA chair Jeremy Beecham said: 'Local government has achieved high levels of service in difficult circumstances but there is always room for improvement. We are in the DIY business, do it yourself service improvement. Our new body will help achieve real change.
'The opportunity to create this new agency arises from the shake up of the Local Government Management Board. The improvement agency will:
- foster best practice, innovation and capacity building for continuous improvement
- provide constructive support and advice in cases of service failure
- promote self-assessment by councils and 'peer group review' whereby experts within local government will help others
- encourage the development of training and development for members and staff in local government.