The government is to consult on plans to allow parish councils to use electronic banking.
Rules dating from the 19th century still require the 9,000 parish authorities to provide two members’ signatures for every item of expenditure, however small.
That means the councils are restricted to using cheques and other out-moded methods of payment in disbursing their combined budgets of £340m a year.
But, under the coalition’s plans to remove local government red tape and help hasten payments to private sector suppliers, ministers are to consult on rescinding the 1894 legislation.
It is intended that, from next year, parish councils will be able to use modern banking methods like electronic transfers. New safeguards designed by the National Association of Local Councils and the Society of Local Council Clerks are to be introduced at the same time.
Michael Chater, chairman of the National Association of Local Councils, said the reform would help parish councils operate “more efficiently and effectively”.
“I am delighted the government is making it easier for local councils to get on and do their job through modernising the rules on the way they can make payments,” he said.
“This much needed reform is very welcome and underlines the important role local councils play in their communities supporting local people and local businesses.”
Local government minister Grant Shapps, left, said: “Parish Councils have been around for over a hundred years, but it doesn’t mean they should be bound by outdated rules which make it harder for them to serve their local community.
“It’s time to bring parish councils into the 21st century so they can get on and do their jobs in a faster and simpler way.
“This is about removing the barriers so that local people can deliver the services that their communities care about, but it could also help hard pressed contractors who rely on quick payments to survive.”