Trade and industry secretary Stephen Byers has put tackling regional disparities in business startups and new technology at the top of the government's policy agenda.

Speaking at a Local Government Association regeneration conference in Liverpool, Mr Byers said action was needed to tackle the "digital divide".

He highlighted government figures showing that one in five north-east businesses do not have internet access, compared with just one in 20 in London. While a third of companies in London traded online, less than a quarter did so in the north-east and south-west.

Business startups were also lower in the north-east, with no part of the region hitting the UK average of 38 new firms per 10,000 residents in 1999. In Camden, London, the figure was 146.

Mr Byers said: "Action is needed at a local level to encourage new businesses to grow and to help existing and traditional industries in all of our regions to adapt to the new global internet economy. The UK simply cannot afford to allow the development of a digital divide."

Money from the government's £30m phoenix fund, aimed at helping new businesses get off the ground, will be directed at boosting e-enterprises in deprived areas, Mr Byers said.

The government has already announced a range of proposals to develop e-business. These include a team of e-commerce advisers and "internet incubator" projects to provide new online companies with support.

Mr Byers said, however, that the disparities were more complex than a simple regional divide. The government has always maintained that inequalities within regions are as significant as those between them.

As an example, Byers pointed to the low rate of startups in London's Greenwich - just 32 per 10,000 residents. On the other hand, the east midlands towns of Wellingborough and Mansfield had 90 and 23 start-ups respectively.