Independent investigations are to be held into the performance of Canterbury's regional council and the Far North District Council, the Government says.
Environment Minister Nick Smith and Local Government Minister Rodney Hide say that Environment Canterbury's poor performance is holding the region back.
They cite problems with the processing of resource consents, a framework for managing the region's natural resources and the regional council's relationships with other councils.
Mr Hide says divisions among the regional council members do not give the Government confidence that it can resolve the problems.
Dr Smith says a review will also be carried out on Far North District Council over its poor performance in processing resource consents.
Environment Canterbury chairman Alec Neill welcomes the investigation, saying he is confident the reviewers will find a positive change in its processes.
Mr Neill says the main concerns relate to incidents in previous years.
Recent changes to the council have started to address the issues and he believes the Government's review team will see a marked difference.
Mr Neill was elected chairman after former chair Sir Kerry Burke was ousted in a vote of no-confidence in September.
Before that, 10 Canterbury mayors sent a letter to Mr Hide expressing concerns about Environment Canterbury's performance.
Christchurch Mayor Bob Parker says the review is a positive step as believes Canterbury's growth has been affected by the regional council's mismanagement issues.
Timaru Mayor Janie Annear says the regional council is clearly in need of assistance.