Speaking at the Sustainable Communities Summit in Manchester, Mr Livingstone (Lab) said the mayor had 'a much better grasp of the local politics than a central government civil servant is ever going to have' and could 'bring in resources from neighbouring boroughs'.
In the short term, he argued for an amendment to planning legislation so failure to determine a planning application within six months would automatically be referred to the Greater London Authority.
He said: 'At the moment, an awful lot of boroughs are taking the best part of two years to clear planning applications. The mere existence of that power would lead to real improvement by some boroughs.'
'You only have to propose another 50 houses in someone's ward and they can find 200 reasons why it shouldn't be, the main one being they may not vote for them when they move in,' he said.
Mr Livingstone also argued local government should have a genuine local income tax, levied by councils, as an alternative to council tax.
Local government minister Nick Raynsford said: 'The Lyons inquiry is looking at ways of making it possible for local government to raise more of its financial requirement locally rather than being dependent on central government grant.'