Three areas of northern England are to vote on devolved power as Labour continues its programme to decentralise government in Britain.

Referendums will be held within the next 18 months in north-east and north-west England, and Yorkshire and the Humber. Politicians and voters there have sought local powers similar to Scotland, Wales, and London.

John Prescott, deputy prime minister, told the Commons the creation of new assemblies would be "good for democracy, good for the English regions, and good for the whole of the UK".

Business was more cautious, warning of additional red tape, while the Conservatives de-nounced the proposal as an "expensive white elephant" which would result in millions of pounds of taxpayers' money being "poured down the drain".

In Scotland, the move was welcomed most warmly by the parties which have benefited from proportional representation in voting for Holyrood.

If the three areas vote "yes" in the referendums, the first English regional assemblies could be up and running by 2006. The new authorities would have responsibility for economic development, jobs, investment, transport, planning, housing, culture, arts and sport, taking powers from central government, not from local authorities, said Mr Prescott.

A review of county, district and borough councils in the three areas will also be carried out, with the aim of creating one-tier local government in County Durham, Northumberland, Cheshire, Cumbria, Lancashire and North Yorkshire.

Mr Prescott said: "Elected regional assemblies will bring greater democracy and a new political voice to the regions. They will reduce bureaucracy rather than increase it and, above all, provide regional accountability."

He added: "We are offering the people of the three northern regions a historic opportunity ... an opportunity we offered the people of Scotland, Wales, and London before them."

David Davis, Tory spokesman, ridiculed the level of interest in the government's consultation period. "In March, they had received 5500 replies, less than the number of people who voted for the Monster Raving Loony Party at the last election," he said. The cut-off date for replies had been extended in a "desperate attempt to stimulate interest".

The CBI backed calls for a 50% minimum turnout re-quirement before any assembly was created. John Cridland, deputy director-general, said: "We do not want to end up with costly talking shops that few people have asked for. There is little business appetite for this as there is no evidence that assemblies will have any impact on economic development."

Canon Kenyon Wright, former convenor of the Scottish Constitutional Convention, welcomed the news, providing there was a specific proposal put forward for the referendum.

A spokesman for the Scottish Socialists said: "We see anything that starts to see the break-up of the dictatorship that is Westminster as positive. If a more progressive voting system is used in the same way as it has been in Scotland and Wales, it will be beneficial for democracy."

Robin Harper, Scottish Green leader, said: "We would hope with new assemblies being elected by PR that our sister party would gain even more representation than at present."