Labour have ignored the euro debate and concentrated on setting out how the party would change local government.

In a joint press conference on Monday with culture secretary Chris Smith, chancellor Gordon Brown said there would be a radical shift away from the "Whitehall knows best era of centralisation".

Brown told journalists that Labour's plans were a step-change that would devolve power to local level.

"In the not-so distant past, each of these efforts would have been initiated, planned, and run by the state. Today, instead, we are encouraging and handing power to local leaders, private sector groups, and local community organisations, working in partnership for the public good," Brown said.

The chancellor was keen to stress that the new devolution would be just as likely to include voluntary groups as councils. "Problems once addressed only by the state acquiring more power can be solved today only by the state giving much of its power back to the people: and to innovative voluntary action which is local rather than remote, personal rather than impersonal".

Culture secretary Chris Smith announced a new £150 million "Communities First Fund" aimed at bringing more lottery funds to deprived areas.

"Four years ago we inherited a national lottery system that favoured the few not the many. It was an entirely application driven system. As a result those people who knew how to work the system, the experts in form filling and bureaucracy were the ones who got their pet projects funded," Smith said.

He announced 50 new projects including funding for local mentoring projects, children's charities, 250 Sure Start projects for children aged under four and cash for new computer learning centres.Smith said: "We want to see lottery money really benefiting local communities and we want to distribute this money to a wide range of projects spread fairly across the country."