Councils that have agreed to improve relationships with the voluntary sector may win extra funding under new proposals.

The government money would go to those councils that have established a compact - a plan agreed between the council and voluntary sector.

The proposal will be discussed in April at the annual meeting of the Compact Working Group, which comprises organisations from the voluntary sector.

It follows a survey of 356 councils by the group which shows that just one in three have compacts and one in five of the country's poorest areas have no plans to establish one.

The voluntary sector in two-thirds of the 88 most deprived areas feel they do not receive enough from the neighbourhood renewal fund.

Only 40 per cent of neighbourhood renewal areas say their compact is effective and a third are unhappy about how their local strategic partnership is working.