Poor leadership at Birmingham City Council could delay a long-awaited £8 billion devolution package for the West Midlands, the Government has warned.
Local Government Secretary Greg Clark told a Commons inquiry that Birmingham's leadership had been too slow to make improvements to the council - putting the historic deal at risk.
And asked if this made a devolution deal impossible, he replied: "The leadership has not been as fleet of foot as I think is needed for the scale of the opportunity, not just for the city of Birmingham but for the West Midlands."
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Mr Clark also suggested the Government would consider taking over Birmingham City Council if it failed to improve.
In practice, this would mean officials appointed by government ministers taking control of council functions, as happened in the London borough of Tower Hamlets last year.
Asked whether the local authority could be taken over by the Government, Mr Clark said: "There are a number of options available."
The West Midlands Combined Authority, which comprises Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton, has submitted a bid to the Government asking for a devolution package which would give them control of £8 billion for transport, skills and growth.
It follows a similar deal agreed between the Government and Greater Manchester last year.
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But a highly critical report published in December by former top civil servant Bob Kerslake warned the council was failing to get "basic services" such as street cleaning and bin collection right.
And a panel set up by the Government to report on how the authority was improving warned in July it was failing to solve its problems quickly enough, partly because of poor leadership.
The council's leader is Birmingham councillor Sir Albert Bore.
The Birmingham Independent Improvement Panel, chaired by former Birmingham Chamber president John Crabtree, said in a letter to Mr Clark: "The senior political leadership of the council, in spite of assertions to the contrary, may still not understand the scale of the task facing the council and the enormous culture change needed right across the organisation by politicians and staff at all levels if the residents of the city are to be well served."
Mr Clark told the Commons Local Government Committee: "I was disturbed by the very frank reflection of Mr Crabtree and his colleagues about the responsiveness of the leadership of the council in Birmingham."
He added: "The group chose to draw that to my attention in particular.
"They will be writing to me again in a few weeks' time to give their further view but the fact that they drew that to my attention, I was concerned - especially since there is a big opportunity across the West Midlands for power to be devolved across the area.
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"And of course it would be unthinkable for Birmingham not to be a big part of that."
Asked by committee member Julian Knight, the Conservative MP for Solihull, whether this meant Birmingham "can't be trusted with devolution", Mr Clark replied: "I will wait for the further letter from the people who are going to advise me on this but they flagged to me that the leadership has not been as fleet of foot as I think is needed for the scale of the opportunity, not just for the city of Birmingham but for the West Midlands."
Chancellor George Osborne hopes to announce new devolution deals in his Spending Review on November 25.
Council sources said they were relaxed about Mr Clark's comments, saying the Government had consistently put pressure on Birmingham City Council to improve but had also made it clear it wanted devolution to go ahead.
The authority accepted it had to improve, an official said. And sources also pointed out Birmingham had played a positive role in creating the new West Midlands Combined Authority.
The authority has also told ministers it is willing to consider being ruled by a directly elected regional mayor, known as a metro-mayor, but only in return for a substantial package of funding.
Mr Osborne has made it clear that a metro mayor is an essential part of any major devolution package.
Sir Albert said the council was making progress, in a statement earlier this month.
He said: "We have been working hard to make significant and sustainable progress at speed over the summer.
"Although it has been necessary to focus on change within the organisation, residents and our partners will also start to see improvements in the way we communicate and engage with them."
He added: "The political will to change remains strong and we are working harder and smarter to deliver the new type of local government the city needs and deserves.
"We will continue to work together to ensure we provide the best possible services for all our citizens, secure increased powers and funding for the region and improved community governance."