Lambeth in south London has brokered a deal with CfBT, a Reading-based firm supplying education services.
Together they will bid to take become one of the Government's first education action zones - a flagship scheme to help deprived areas .
Schools in a zone can opt out of the national curriculum and national teachers' pay and conditions. They will be managed by a forum of council and business representatives. The zones will receive #163;500,0000 - half from the Government and half raised by the forum.
The Government wants to promote private involvement in education, but the policy has angered local authorities.
Lambeth, with its hard-left history, may seem an unlikely candidate for the brave New Labour world of public-private sector partnership. However, Heather Du Quesnay, its education director wants to change its image.
The proposal is expected to be passed by the education committee of the hung council.
Ms Du Quesnay said: "I wouldn't want to make the impression that Lambeth is washing its hands of education and leaving it to the private sector. We do expect CfBT to challenge some of the traditional local authority practices, but provided we are in partnership, we are happy with that."
In a separate initiative, Lambeth has employed a private inspection and advisory service, PKR Education Consultants, to advise five primary schools identified as needing help.
"One of the great things about being in Lambeth is that it has been through the mill in past few years and people are now ready to consider change and be daring," said Ms Du Quesnay.
The council has carried out a ward-by-ward analysis of socio-economic factors to identify the most socially disadvantaged areas and the schools which serve them. Lambeth has five failing schools.
Ms Du Quesnay said governing bodies and heads would have to be enthusiastic, and would be vital partners in the zone. "Clearly I can't dragoon them. At the moment we are attempting to help people to know what the potential and opportunities are," she said.
She hopes the zone will become a centre for innovative practice and would involve some of the many successful and forward-thinking heads in the borough. But if schools in the zones became stigmatised, she said, she would pull out of the deal.
Lambeth has already employed CfBT to advise on financial management, initial teacher training and recruitment.
"We are a fairly small local authority, CfBT has the scope to have access to all sorts of expertise and skills," said Ms Du Quesnay.
Listed as a charity, CFBT has had a low profile history working abroad in language tuition. But in the 1990s it became the largest private agency to compete for school inspection contracts. Now along with firms such as Nord Anglia, CFBT appears to be building an established place in the state education service.
Tim Emmet, CfBT's project planning director, said: "We will be bringing an innovative and different approach to the management of educational resources. We still have to work out who is doing what. The deadline for applications in March 20 and by then the details will be clearer."
The Government intends five zones to be established in September and another 20 the following year. Stephen Byers, the school standards minister, said this week the zones would become the test-beds for the education system of the next century.