David Cameron has outlined plans to help people establish co-operatives which could set up or run local public services such as schools in England.
Mr Cameron says co-ops have more flexibility than state-run agencies.
The Conservative Co-operative Movement would seek to promote co-ops which, he said, provide "flexibility and dynamism that a central state agency lacks".
The schools would be taxpayer funded but owned by parents and the community.
Education minister Jim Knight said it was a "wheeze" and the idea of co-ops running schools was "nothing new".
Mr Cameron unveiled the plan in Manchester as ex-Tory leader Iain Duncan Smith released a report outlining the problems of social breakdown in the city.
Mr Duncan Smith's Centre for Social Justice survey on Manchester suggests a picture of educational failure, high levels of youth crime, unemployment, widespread family breakdown and severe alcohol abuse.
Mr Cameron said it was great to feel the "energy and optimism" in Manchester, which he said was enjoying rapid economic growth.
But he said Mr Duncan Smith's report showed the city was in danger of becoming a "two tier" one with fast economic growth alongside continuing social problems.
Independent of party
He said he was a "one nation" politician and said he was "passionate" about tackling social breakdown.
The Conservative Co-operative Movement "will be independent of the Conservative Party", he said.
"But it will be a resource for Conservative activists and local community groups of all kinds, wanting to set up their own co-ops to take over the management of local public services.
"It will campaign for the principles of local, democratic, voluntary, public ownership of public services and public facilities."
Tory school reforms would create "a new generation of co-operative schools in our country", in the same way as Sweden, which has more than 100, and Spain, which has more than 600.
"So I want to explore how we can create a new generation of co-operative schools in Britain, funded by the taxpayer, but owned by parents and the local community," he said.
Mr Cameron said it was appropriate to launch the new organisation in Manchester, just a few miles away from Rochdale, where the first co-operative movement in the world was created.
He said it was a "shame" that the movement was associated with the "left", when its principle "captures precisely the vision of social progress that we on the centre-right believe in".
For the government, Mr Knight said: "Labour have already given parents the power to draw up plans for their own schools and we continue to back the co-operative and mutual sector's involvement in education."
He said Labour had "nurtured" co-operatives which had experienced "neglect and damage" under the last Conservative government.
Co-operatives are organisations which are owned by their members, and run for their benefit.
Well known examples are John Lewis and building societies such as Nationwide. In politics there is also a Co-operative Party, which is closely affiliated with the Labour Party.
Schools Secretary Ed Balls is one of 29 MPs, who stood for the "Labour and the Co-operative Party" at the last general election.
The Co-operative Bank is also one of the party's biggest lenders.
The Conservative Co-operative Movement's chairman will be Jesse Norman, a Tory parliamentary candidate in Hereford and former director of a co-operative enterprise.