Gipsies and travellers could be allowed to set up temporary camps in Leeds with the council's blessing.
The authority looks set to consider introducing "negotiated stopping sites", a policy introduced in Bristol and Cheshire.
Leeds councillors are keen for a new approach because of the large numbers of illegal camps and the time and money it costs to move travellers on from them.
In Cheshire, the short-term stopping sites are located on unused bus lanes and disused roads away from residential properties.
It could mean Leeds providing a temporary water supply, toilets and a refuse collection on these sites, with the bills picked up by travellers.
"This approach in our view would ease the pressure on the number of unauthorised encampments," according to a draft report to be discussed by senior councillors next month.
Members of a council scrutiny board have drawn up a number of recommendations designed to reduce friction between settled communities and travellers.
Between 2003 and now Leeds Council has had to pay around 2m sorting out problems relating to these illegal sites, which often require court action and expensive clean-up bills.
At Spinkwell Laner recreation ground in Tingley, the cleaning of the site alone cost almost 53,000 following an unauthorised camp by travellers.
The draft report says that temporary stopping sites would also assist the police who would be able to direct those on unauthorised camps to legitimate sites.
"Failure to comply would be an arrestable offence and vehicles could be seized and removed. The police would then have to apply to the magistrates court for an order if the gipsies and travellers failed to leave in accordance with the direction."
Cheshire West council chiefs have told Leeds councillors that temporary stopping sites have improved relationships between gipsies/travellers and local communities.
But the development of negotiated stopping sites would not be without difficulties, the scrutiny committee says.
In some areas temporary transit sites have inadvertantly become permanent.
"We are aware of the mixed experiences of some authorities where transit sites have become, by default, permanent sites. The Environment and Neighbourhoods directorate (of the council) would have to ensure that sites were properly managed and all appropriate legal safeguards established prior to operation," the report notes,
Finding suitable locations will also be a problem as they will need planning consent and public consultation.
"It would necessitate the council being much more pro-active and positive in explaining to the media and communities why it was looking at a new direction in trying to deal with this continuing problem."
The report suggests that temporary sites could be "the first step in identifying land for small gipsy and traveller permanent sites in the city."
The report also proposes the creation of permanent pitches for 12 Leeds-based travelling families who have been present at just over half of all unauthorised camps since April last year.
These extra pitches could be created at the existing Cottingley Springs travelling site.
Another option would be to encourage the creation of private pitches for a small number of caravans.
"We recognise that identifying small suitable permanent sites...will be difficult and expensive," the report notes.
It makes a series of recommendations but says some of the conclusions are not supported by some councillors.
A final decision on what to do next is expected to be delayed until after Government advice and direction on the subject has been issued.