George Osborne has said there is a 'strong case' for more elected mayors to drive growth and development in northern cities and rival London Mayor Boris Johnson.
Speaking on BBC radio 4's Today programme the Chancellor said: "I think there is a strong case for elected mayors in places like Greater Manchester to make sure they have the same powers, the same clout, as the mayor of London does in our capital.
"I think it helps to have a single individual who is, of course, democratically accountable, but also bringing together powers over planning, housing and transport."
He added he wanted to bring together cities like Manchester, Leeds, Liverpool and Hull with new transport links.
George Osborne will say a collection of northern cities linked closer together by new transport infrastructure could "take on the world" as he bids to end London's "unhealthy" economic dominance.
The Chancellor will say in a keynote speech in Manchester today:
We need an ambitious plan to make the cities and towns here in this northern belt radically more connected from east to west - to create the equivalent of travelling around a single global city.
As well as fixing the roads, that means considering a new high speed rail link.
Today I want us to start thinking about whether to build a new high-speed rail connection east-west from Manchester to Leeds.
New railway plans proposed by Chancellor George Osborne mean commuters could soon travel from London to Manchester in just one hour.
In a speech in Manchester today Mr Osborne will say 'we must do more to connect our northern cities.'
The proposed line would be based on the existing rail route between the two cities "but speeded up with new tunnels and infrastructure" to create "a third high speed railway for Britain".
He will also propose a high-speed rail connection east-west from Manchester to Leeds.
A new high-speed rail connection and improved roads between England's northern cities could help create an economic powerhouse to rival London, George Osborne will say today.
He will use a keynote speech to say an upgraded, high-speed link between Manchester and Leeds should be considered as part of the review of the second phase of the HS2 project.
The Chancellor will say he wants travelling through towns and cities in the northern belt to be as easy as moving around a major global metropolis as part of a plan to help them "take on the world".
Under current plans the £50 billion HS2 high-speed rail project will link London to Birmingham in its first stage, before creating a Y-shaped network with lines to Manchester and Leeds by 2032/33.
But concerns about connectivity between the northern cities were raised in the report by HS2 Ltd's chairman Sir David Higgins earlier this year.
Transport unions have hit out at Virgins Trains after securing an extension deal to its West Coast Main Line franchise.
The leader of the TSSA rail union said Virgin Trains is "being rewarded for failure on the West Coast line" and argued that publicly-owned franchises "provide better value to both taxpayers and passengers".
"Ministers continue to ignore the lesson that publicly-owned East Coast has returned far more cash to the Treasury in the past five years than Virgin," he said.
Mick Cash, from the RMT union, has said Virgin Trains have "bullied themselves into a monopoly provider position" by "ignoring the public sector option".
"Rail franchising is a one-way ticket to the bank for greedy shareholders as these companies promise the earth and deliver just the bare bones in the interest of profit," he said.
Founder of Virgin Group Sir Richard Branson has taken to Twitter to welcome the "great news" of Virgin Trains securing an extension deal to its West Coast Main Line franchise.
Under the extension deal, West Coast services will continue until March 2017 and a number of "improvements" including increased capacity, new services and "superfast Wifi" will be unveiled.
Under the extension deal for Virgin Trains to continue running a West Coast service until March 2017, the operator plans for Shrewsbury to have two services in each direction Monday to Saturday and one service in each direction on Sunday.
Blackpool North is also expected to have one service in each direction Monday to Friday.
The company has also committed to working with Network Rail on improving journey times, including the remodeling of Carstairs junction in South Lancashire.
Virgin Trains executive chairman Patrick McCall said: "We're delighted to have reached a deal after some tough negotiations with the Department of Transport.
"It puts the problems of 2012 firmly behind us, and shows the clear benefits of a well-run franchise system."
Virgin is to pay £430 million to the Government, a 58% increase a year, over the course of the extended contract to continue running the West Coast service.
The franchise serves more than 30 million passengers a year and covers areas including London, the West Midlands, Greater Manchester, Merseyside, Strathclyde and Lothian.
Virgin said 21 trains will have one of their first class carriages converted to standard class, resulting in an increase of 2,100 seats per day.
It will also aim to start new direct services between Shrewsbury, Blackpool and London from December, boosting connections for passengers.
"The West Coast provides a vital artery between London and Scotland and it is crucial we do everything we can to improve services on this much-used route," Transport Secretary Patrick McLoughlin said.
Virgin Trains promised to increase capacity on the West Coast mainline after securing a deal to continue running the franchise until March 2017.
The operator said there will be "significant improvements" for customers with the introduction of free superfast WiFi, more seats and new services.
Virgin Trains previously lost out to FirstGroup in the battle for a new 13-year West Coast franchise, but the process was scrapped by the Department for Transport due to errors in the bidding process.
The Government are considering introducing tougher penalties for using a mobile phone while you drive after research showed that it slowed reactions more than drink or drugs, The Sunday Times (£) reports.
A study by the Transport Research Laboratory found that a driver's reaction time slowed by 46% when they made a call on a mobile, compared with 37% when texting and 27% during hands-free calls.
It also found that reaction times reduced by 13% for those on the drink-drive limit of 80mg of alcohol per 100ml of blood and 21% for those who had used cannabis.
The newspaper showed the results to road safety minister Robert Goodwill who said he would talk to the Ministry of Justice about the issue and added: "I will see if we need to change the penalties.”