The West Yorkshire Combined Authority will initially oversee a £1bn transport fund and be the body responsible for a £400m economic infrastructure fund.
It could eventually take on further responsibilities, however, including working with other parts of the North to take control over the running of rail services through the region.
If the plans are approved, the leaders of the five West Yorkshire councils will sit on the body alongside three opposition politicians.
For technical reasons, York will be a “partner member” at the outset but the intention is for the city to become a full member.
The chairman of the Leeds City Region Local Enterprise Partnership will also have a seat at the table.
Discussions over the authority have been underway for months but next week senior councillors in Calderdale will become the first in the region to formally decide whether the idea should be taken forward.
Calderdale Council leader Tim Swift said: “We are supporting the idea of the Combined Authority going forward because we think there are some clear advantages of working across the area on economic development and transport.
“We also feel this is a way of securing things for Calderdale that we would not be able to do on our own.”
The Combined Authority idea first emerged last year as part of the negotiations over the Leeds City Region ‘city deal’ which saw the Government agree to hand over significant control over spending in areas such as transport and skills.
Supporters of the idea argue it will make it easier for councils to work together on economic issues and secure further powers and funding from Whitehall.
Wakefield Council leader Peter Box said: “This is not a way to take existing powers away from individual authorities - we do have differences in our traditions and some of our economies - but it is a mechanism for dealing with the transport fund and the infrastructure fund.
“We think by doing this we can make a real difference and we are committed to playing our part in creating growth and jobs.”
The decision to involve opposition politicians on the Authority is seen as a way of giving it a long term stable future.
Robert Light, leader of the Conservative group on Kirklees Council, said: “What has been put forward is a sensible structure that will not only tackle some of the issues that we need to deal with around transport and investment but is also a governance structure that reflects the political make-up of West Yorkshire.”
A legal technicality is likely to prevent York becoming a full member when the Authority first launches and the Government has been asked to make the necessary changes.
York Council leader James Alexander said: “The Combined Authority is the first step on a long road to greater devolution for Yorkshire. The coming together of West Yorkshire Authorities and York is significant to our self determination over devolved transport and skills funding.
“Increasingly we will put aside council boundaries to work together on job creation and economic growth.”
All the councils involved will be asked to comment on the plans in the weeks ahead before they are signed off by the Government. It is due to start work in April 2014.