THE growing North-South divide could be halted by moving government departments away from London and into the regions, it was claimed last night.

A report by think-tank Catalyst urged the Government to go further with plans to devolve Civil Service functions from the capital and won backing from a number of influential bodies in the North-East.

The report, co-written by Durham University geography professor Ash Amin, suggested all ministries should be dispersed closest to areas that had problems they were trying to solve.

This could mean the Department of Trade and Industry being moved to the North-East to tackle the decline in manufacturing industry.

Steve Rankin, regional director of the Confederation of British Industry, said: "Some substantial and serious action by the Government to decentralise their activities would do far more for this region than this nonsense about creating elected assemblies."

A spokesman for regional development agency One NorthEast said: "We would welcome any major employment relocation into the North-East, and should the Government decide to relocate some of its departments outside the capital we will encourage the consideration of the region as an ideal location to live and work."

The Northern Echo is backing moves to transfer Government functions away from London and believes it would create jobs and added prosperity.

The campaign was prompted by the Government's proposal to move about 20,000 of the country's 144,000 civil servants out of the South-East.

Some departments already exist in the region, with the Department of Work and Pensions in Longbenton, North Tyneside, and an office of the Department for Education and Skills in Darlington.

A Government spokesman refused to comment on the report, but said its own review, conducted by Sir Michael Lyons, was due to report its findings later this year.