Sunderland and the Tees Valley are being invited to compete for City Deal status, to allow them greater powers to invest in economic growth.
The first wave of City Deals was finalised in July and covered England's eight largest cities, including Newcastle.
Now Sunderland and the Tees Valley will be asked to work together, alongside the Local Enterprise Partnership, to come up with proposals by January.
The Government says the bids will need to be ambitious, demonstrate strong leadership and to be focused on creating economic growth and new jobs.
If successful, Sunderland and the Tees Valley will be invited to negotiate a deal with the Government allowing some powers to be devolved from Whitehall.
You can watch the full report from Helen Ford below: