The leaders of Sheffield, Barnsley, Rotherham and Doncaster councils - who form the constituent authorities making up the Sheffield City Region Combined Authority - have reached agreement over a proposed deal.
It would see the city region receive an extra £30 million of government funding every year and new devolved powers in areas including planning.
The draft deal was approved at a meeting of the combined authority board yesterday.
If approved by the government and the public, the plan would see Labour mayor Dan Jarvis granted powers to create a spatial framework for the region, subject to a unanimous vote by the city region's constituent councils.
The proposed devolution deal states that the spatial framework would be non-statutory but "may be a material consideration in planning" and that local development plans would be expected to be "in strategic alignment" with the framework.
Additional proposed planning powers include the ability to create mayoral development corporations to "support delivery on strategic sites" in the region and "compulsory purchase powers in line with those held by" Homes England.
Transport powers would include responsibility for a "devolved and consolidated local transport budget" and exploration of ways in which the combined authority can take "more control over the planning and delivery of local transport schemes, particularly in preparation for High Speed Two".
The government’s £30 million commitment to additional capital and revenue funding for the region would be supplemented by a pilot scheme allowing the region "to retain 100 per cent of any additional business rate growth beyond expected forecasts".
Consultation on the draft deal will take place from 3 February to 15 March.
Agreement on the issue comes after years of negotiations between local authorities in the city region.
A devolution deal was first agreed between the Sheffield City Region Combined Authority and the government in 2015 and led to the election of Dan Jarvis as the city region’s first mayor in May 2018.
But negotiations hit a stumbling block in 2017 when Doncaster and Barnsley indicated their preference for a Yorkshire-wide devolution deal.
However, a deal was reached in 2019 which saw all four councils agree to support a South Yorkshire devolution deal on the basis that they would be free to join a Yorkshire-wide devolution group from 2022.