The proposal is included in an environment select committee report on urban policy which is strongly critical of the government's failure to act on Lord Rogers' urban task force report.
The MPs describe the Treasury's inactivity since Lord Rogers' report last summer as 'disgraceful'. Gordon Brown's department 'appears to have kicked the report into the long grass'.
They see the policy board - one of Lord Rogers' recommendations - as a way of providing badly needed policy co-ordination. The committee criticises the lack of shared focus between government departments and between local and central government.
Its work would be backed by an annual 'state of the towns and cities' report.
The committee complains that ministers confuse urban renaissance with regeneration focused primarily on deprived areas.
Public disquiet at the standard of services such as schools, housing and health in inner-city areas remains high despite the expenditure of 'very big sums of money', the MPs say. Though they call for better targeting and management of this funding, they do not suggest any changes in responsibility for delivering services.
Deputy prime minister John Prescott said: 'All government departments are committed to an urban renaissance and are working closely with us on the urban white paper.' He said he shared Lord Rogers' well-publicised impatience to see action.
Shadow environment secretary Archie Norman described the report as a 'stinging criticism' of the Prescott era.
The urban renewal white paper is due in the autumn.