Plans have been submitted to the Government for the nine councils in South Yorkshire, north Derbyshire and north Nottinghamshire to take over major powers governing areas of the local economy.
Sheffield City Region would establish a ‘combined authority’ having powers over economic development, regeneration and transport.
If the Government agrees, the body – which would cover 1.8 million people and an economy generating £25 billion a year – would be established by next April.
Coun Julie Dore, Sheffield Council leader, said: “The city region authority is an important step forward.
“It demonstrates that by working together we can deliver real benefits for residents across our districts.”
The new authority would focus on moving money and power away from the Government, rather than taking functions from existing councils, which would operate alongside the new organisation.
The region has already been granted a £500 million infrastructure fund to spend over the next decade.
Money could be spent on projects such as new roads and extensions to Supertram.
And the city region local enterprise partnership has been established to link the public sector with private businesses and help economic growth.
The Sheffield City Region Authority plans are an expansion of the area’s City Deal - announced by the Government last year.
Former Tory minister Lord Michael Heseltine has recommended greater regional devolution.