Prime Minister Julia Gillard says she has bipartisan support for a referendum to recognise local government in the Australian Constitution.
The referendum will run in conjunction with the September 14 federal election.
Announcing the referendum in Brisbane, Ms Gillard said local government was important to communities and to the nation.
"This referendum will be presented in a bipartisan spirit," Ms Gillard said.
"The leader of the opposition has indicated he is prepared to support such a referendum.
"We took this as a promise to the 2010 election and now here in 2013 I will be asking the nation to vote `yes' and to get this done."
Ms Gillard said the draft legislation and proposed wording will be released shortly.
She said the constitutional change would not alter the ability of state governments to legislate for local government, including amalgamations.
The Constitution says nothing about local government despite it providing a wide range of services.
"We are proposing a modest and commonsense change to our Constitution that simply reflects the modern reality in our local communities," Ms Gillard said.
The changes are based on the findings of an expert panel and endorsed by a parliamentary committee.
Local Government Minister Anthony Albanese said holding it at the same time as the election would cut the cost of it.
Local Government Minister Anthony Albanese urged people to vote yes in the referendum, saying constitutional recognition would validate "the reality of modern Australia".
"The reality in which local government has long ago moved beyond just being rates, roads and rubbish," he said in Brisbane.
"Local government that's engaged in child care, that's involved in a range of service provisions, and we want to recognise that."
Mr Albanese said the constitutional change would not affect the relationship between local and state governments.
"It will recognise ... that local governments are creations of state government and are still responsible to and accountable to those state governments," he said.
"A modest change, but an important one to ensure that our constitution, our most important document, reflects the reality of modern Australia."