The first Canadian and US-style business districts are to be established in six areas of Scotland.
The system is credited with boosting Times Square
Glasgow, Edinburgh, Inverness, Falkirk, Bathgate and Clackmannanshire will get business improvement districts (Bids).
Private firms will pay a slightly higher business rate and vote on which projects extra funds are used for.
Each pilot area will get up to £50,000 to develop its Bid, with a further £200,000 Scottish Executive funding available later for successful schemes.
Some Bids are already operating south of the border, although the idea was pioneered in Toronto, Canada.
It soon spread to the US, with perhaps the most famous being credited with transforming New York's Times Square.
Typical Bid projects include extra policing, the installation of closed-circuit television cameras, adding trees, benches or tables and expanded transport schemes.
Finance Minister Tom McCabe said the initiative would encourage business to work with local councils to regenerate urban centres and boost economic growth.
The executive hopes that the six Bids will be ready to vote on proposals once the legislation is in place, planned for 1 April, 2007.
Mr McCabe said: "Bids have proved successful elsewhere and I am confident these pilot projects will pave the way for successful Bids in Scotland.
"This is not about what we can do for business but what businesses can do for themselves and I'm delighted that the business community has thrown its weight behind the initiative."
Proposals will only go ahead if more than half of local businesses vote in favour, as long as they also represent more than half of the rateable value of those eligible to vote.
The initiative was developed by a Bid steering group, whose members included the Scottish Retail Consortium, Scottish Chambers of Commerce, Convention of Scottish Local Authorities (Cosla) and Royal Institute of Chartered Surveyors (Rics).
Rics Scotland spokesman David Davidson said: "Retailers, occupiers, developers and property owners all have a common objective to see an improvement in our high streets and town centres.
"We all want interesting and vibrant places to shop and spend our leisure time in safety and comfort."
But the Federation of Small Businesses (FSB) expressed concern it could become an "expensive gimmick".
FSB Scottish policy convener Andy Willox said: "The worst-case scenario for small businesses is that they end up paying a levy additional to their business rates for local services or capital projects that they do not want and that do not benefit their business."