The London project report, commissioned by prime minister Tony Blair and deputy prime minister John Prescott, reviews the strategic issues facing London, its role as the UK's capital and as a world city, and the delivery of long-term central government priorities in the region.
Issues covered include housing, transport, public services and the labour market.
The wide range of outcomes in public services was attributed to a high proportion of inner London boroughs being rated as either 'excellent' or 'poor'.
Another problem was that the best services attracted the best staff, leaving other councils with less-skilled people. This was partly due to London's compact geography and the ability of staff to move from one council to another.
One solution was 'to ensure quality and stability in both leadership and staffing' by 'considering services' capacity to dismiss poorly performing leaders'.
But Kensington & Chelsea LBC chief executive Derek Myers said: 'There are adequate tools to ensure good people are selected, supported, retained and moved on.'
He added: 'It's a mistake to see London as a free market for talent.
'But better performing authorities undoubtedly have an edge in attracting and retaining people.'