A Cabinet Office review of the local government ombudsmen in England, Scotland and Wales and the parliamentary and NHS commissioner, recommends a merger as the best response to 'the changing face of public service delivery'.
Cabinet Office minister Graham Stringer said ministers would consult on the proposals before proceeding with what could be the biggest shake-up in the ombudsman system since it was introduced in 1967.
If the review's thrust is accepted, individual ombudsmen will be appointed with responsibility across a whole new public administration commission. They would each be identified with a particular group of bodies within the commission's remit.
Complainants will be given a copy of a draft report for comment, as will councils, but the ombudsmen's findings will remain non-binding.
Although the review found no evidence that complainants seeking compensation are distorting the system, they said the position should be monitored and ombudsmen must exercise caution and balance when highlighting compensation awards in publicity.
The review said: 'It is noticeable that the [annual] reports by the ombudsmen and independent complaints examiners frequently describe the winning of significant compensation. It would be helpful if the full range of possible outcomes is reflected, including failing to obtain redress, apologies and small levels of compensation.'
The team warned that the current approach to publicity could encourage false expectations and lead to 'a competitive approach' between providers of redress.