Ex-Deputy Prime Minister Michael Heseltine is heading a cities' task force aimed at shedding the Tories' image as the party of "leafy suburbs".
Lord Heseltine was environment secretary after the Toxteth Riots
Tory leader David Cameron saidurban areas were being left behind as he launched the task force in Liverpool.
Lord Heseltine, who led the regeneration of Liverpool after the 1981 Toxteth riots, said deprived areas needed to be made competitive.
But Labour and Lib Dems say the Tories caused inner-city decay in the past.
The former environment secretary said: "Instead of areas which a large number of people try to get out of because the schools aren't good enough, because the housing isn't good enough, because the dereliction is off putting, you have to make them competitive with those leafy suburbs to which people go."
Lord Heseltine said Labour had set up several tiers of responsibility but did not understand that big decisions had to be taken.
The task force will look at large-scale urban regeneration and, in particular, at capital projects which might be undertaken by a future Conservative government.
Former Chancellor Ken Clarke and ex-leader Iain Duncan Smith are among others heading task forces to advise the Conservatives on new policies.
Lord Heseltine denied it was an attempt to prevent potential troublemakers from speaking out, saying he would criticise the Tory leadership if he felt strongly about an issue.
At the launch of the new policy group, Mr Cameron said: "For too long Conservatives have been seen as the party of the leafy suburbs.
"That's changing. We already run local authorities in urban areas like Trafford, Coventry, Bradford and London, and I now want to step up the pace with a new policy focus on our cities.
"Too many of Britain's urban areas have been left behind by Labour and let down by complicated and contradictory bureaucratic schemes which take power away from local people."
Mr Cameron stressed that urban regeneration must be about more than just "a makeover for city centres" and must improve life in the surrounding neighbourhoods left out of any city centre.
The Conservatives say they will follow the launch with further policy announcements on affordable housing for first-time buyers, plans to improve inner city schools, and a new approaches to tackling crime and nuisance behaviour on council estates.
Communities Minister David Miliband said the task force was in the hands of people responsible for past "failed" Tory policies.
"The Tories presided over a flight from our inner cities and urban areas as families fled from crime and urban decay and our towns and cities suffered the consequences of the two worst recessions since the war," he said.
Mr Miliband is publishing a report on the state of British cities on Tuesday.
Liberal Democrat frontbencher Sarah Teather said the Tories were "an irrelevance" in most inner city areas.
"The fact that they don't have a single councillor in cities like Liverpool, Manchester, and Newcastle is not simply down to an image problem," she said.
"Voters remember it was the Conservatives who sucked the life out of urban areas in the first place."