In a report published today, Policy Exchange said residents of cities such as Liverpool, Bradford and Sunderland should be encouraged to move to the more prosperous South-east. It adds that a future government should build three million homes in and around London, Cambridge and Oxford to prompt Britain's biggest mass internal migration since the 19th century.

The report said restrictions on house-building in the south east should be lifted to lower house prices and stop people on low incomes being "trapped" in less prosperous parts of the country.

The think tank adds that money currently being pumped into renewal projects and back-to-work schemes should instead be given directly to councils according to local wage levels to spend on regeneration measures.

Michael Gove, the Tory education spokesman, founded the think tank while its policy director is Anthony Browne who is about to begin working for Boris Johnson and is tipped for a role at No 10 if the Conservatives win the next election.

In its report, Policy Exchange said: "We need to accept above all that we cannot guarantee to regenerate every town and every city in Britain that has fallen behind. Just as we can't buck the market, so we can't buck economic geography either."

In a statement last night, the Conservatives said the report did not reflect party policy, adding that they wholeheartedly supported the regeneration of northern cities.

A spokesman for the Department of Communities and Local Government has also said it disagrees with its conclusions.

The report comes on the same day that David Cameron begins a two-day visit to the north west of England.