British cities will be able to compete for the national capital of culture title as part of government plans to give the arts a prominent role in urban regeneration.

The competition, announced on 7 January, will take place every four years and the winner will organise a year-long arts programme and have the chance to host events, usually located in London, such as the Turner Prize, the Brit music awards and the Baftas. The idea stems from Liverpool's success as the European capital of culture in 2008, which generated £176m in tourism. The scheme, developed by the cultural secretary Andy Burnham and chair of Liverpool capital of culture Phil Redmond, is aimed to begin in 2011 – ahead of the cultural Olympiad in 2012.

Burnham told the Guardian: "In Liverpool, something important and significant has happened that has implications for cultural policy in Britain, but more broadly for regeneration, education, skills and the new economy. "By receiving national recognition as a city of culture, any city of the UK could be given the opportunity to bring out the creative skills, talents and enthusiasm of its people – showcase it on a national stage – and change perceptions of it," he said.

"Regeneration led by culture and cultural projects can be the most successful and durable, stimulating a new creative economy." Burnham expects this competition could have the same benefits as a European competition that Britain can necessarily only win once every 20 years or so.