All of the Audit Commission's work is set to be outsourced to the private sector, ministers have annouced today.

Since the announcement last August that the commission is to be disbanded, ministers have been examining the local watchdog's options. In a letter to local authority chief executives, Communities and Local Government permanent secretary, Bob Kerslake, said the "intitial view" is that outsourcing audit practice to the private sector is the "better option".

Local Government minister, Grant Shapps, saida range of firms could be invited to bid for the work, including the possibility of an employee-owned mutual.