The prime minister is tightening his grip on the machinery of government with the establishment of a Performance and Innovation Unit in the Cabinet Office.

This will be overseen by Jack Cunningham, the new Cabinet "enforcer".

Mr Blair has also merged the Office of Public Service with the rest of the Cabinet Office to aid government departments develop and implement policies more effectively.

The changes come on the recommendation of the Cabinet Secretary Sir Richard Wilson.

Wilson: the prime minister has followed Sir Richard's proposals

The prime minister said in a Commons written answer: "The aim of this programme is to create a focus for the drive to modernise government to tackle the new challenges it faces."

The proposals have received a cautious welcome from the Public and Commercial Services Union.

'Improving delivery'

Mr Blair said the new innovation unit would have the power to range across Whitehall departmental boundaries to "improve the delivery of the government objectives".

The new unit will also be able to select aspects of government policy for review, for the "better co-ordination and practical delivery of policy and services which involve more than one public sector body".

Mr Blair also said a new Centre for Management and Policy Studies and a "reshaped" Civil Service College will also be set up within the Cabinet Office to take responsibility for training Whitehall officials at all levels.

This, he hopes, will ensure that "staff at all levels will get the training they need" to enable them to better serve their ministers.

'Outstanding staff'

Mr Blair said: "Sir Richard confirmed one impression of my own: that while the Civil Service has many outstanding staff, it has not always implemented the best systems to invest in their development."

The position of the Cabinet Office as the headquarters of the Civil Service will be reinforced through the establishment by Sir Richard of a new Management Board, which will include a number of permanent secretaries.

Other details in the set out by Mr Blair will see the Department of Trade and Industry, the head of the Government Information and Communication Service and the Government's Chief Scientific Adviser all work from the Cabinet Office.

Further details on government modernisation will be included in a White Paper out in the autumn.