The Government has said it is ready to give “assisted area status” to parts of Bradford, Calderdale, Kirklees and Leeds.
There are strict European rules governing the way governments support industry, classified as state aid, to try to ensure proper competition across the European Union.
But the EU allows governments to identify areas where the economy needs extra help and companies can be offered bigger grants to help them create jobs or incentives such as discounts against taxes.
Parts of Wakefield, Barnsley and Selby were the only parts of the Leeds City Region area previously covered by assisted area status.
But the latest proposals for the next round set out by the Government look set to dramatically increase coverage.
New and existing businesses in the areas covered could benefit from the move.
Leeds City Region Local Enterprise Partnership chairman Roger Marsh said: “The Leeds City Region is an area of incredible economic potential. I firmly believe that we can unlock that potential if we are given the powers locally to drive our economy forward.
“If confirmed, Assisted Area status for some of our key areas of economic opportunity would be another important tool we can use to help us achieve our potential.
“Not only will it give us more flexibility to help existing city region businesses grow it will also make the city region an even more attractive location for businesses looking to relocate or expand into.”
Meanwhile Sheffield’s LEP has welcomed a High Court ruling that a Government decision on how to allocate EU funding in Liverpool and Sheffield City Regions had been unlawfully made. Sheffield City Region was set to receive significantly less money than in previous years.
The ruling will not result in the authorities automatically receiving more funding but it does mean the Government will have to reconsider its decision.
James Newman, chairman of the Sheffield City Region LEP, said: “We welcome the High Court decision to quash the Government’s unlawful decision over EU funding. However, we are very disappointed that the judge has not ordered the Government to adjust its allocation of funding, and will continue to support any appeal against this decision.
“The LEP remains steadfast in its belief that the UK government’s decision to cut our EU allocation by over a half is grossly disproportionate compared to other similar parts of the country and is economically unjustifiable.”