Council procurement of everything from pencils to social care could be centralised under four buying agencies as part of the government's drive to slash waste from the state.
The idea was proposed in an interim report from the government's efficiency review, amid a damning critique of Whitehall spending on red tape and claims the civil service could shed 80,000 jobs.
Peter Gershon, is due to report this summer, but the interim report, produced last December, was leaked to The Financial Times.
Its content has received a cautious reception within local government, with recognition of the need for efficiencies in procurement being balanced against concerns that standardisation could ignore local needs and political choices.
The Local Government Association
suggested there had been little council input into the report, claiming it had been frozen out of the review process until the last few weeks.
Association director of strategy and communications Phil Swann said: 'Until recently we have not had the sort of engagement in this process to ensure that its conclusions are robust and capable of being implemented.'
The report says procurement in areas as diverse as supplies, back office functions like finance, and core services like social care should no longer be carried out by individual councils, but centralised under as few as four agencies.
The ODPM will take a step in this direction next week when it announces nine councils - or groups of authorities - as regional centres of excellence for procurement, with a remit to promote collaborative purchasing and joint strategies.
Sir Peter's report also says that central government could make cuts of at least£2.5bn in public sector regulation by slashing ring-fencing and bidding systems and moving to fewer, more localised targets.
Improvement & Development Agency executive director Lucy de Groot warned that Whitehall's conserv ative culture could see it transfer cuts to the rest of the system, including councils.
She added: 'That's been the tradition in the past. The degree to which that changes will be a test of how radical it's going to be.'