Chancellor George Osborne has signed a devolution deal to create the Sheffield City Region.
The deal with South Yorkshire civic leaders will see the area elect a mayor as the government attempts to deliver its plan to create a Northern Powerhouse.
A mayor will be elected for the first time in 2017.
The office will assume responsibility for transport budgets, franchised bus services and strategic planning.
The deal also includes additional devolved powers for the area’s Combined Authority.
This includes a 30-year, £30m deal to invest in local manufacturing and innovation.
The deal will be subject to the agreement of each of the local councils within the Sheffield City Region and is subject to consultation with local people.
Osborne said: “Sheffield is forging ahead in the Northern Powerhouse, which this historic deal proves is taking shape.
“It has the power to change the shape of local government in the region in a way that would have been unthinkable even just a few years ago.”
Sheffield is the second northern city to sign up to such an agreement, following in the footsteps of Manchester.
Communities secretary Greg Clark added: “Devolving power from Whitehall to town halls is essential for rebalancing the economy and creating the Northern Powerhouse.”
