The debate about the need to build social capital and to engage local communities in public policy has become a central issue in many advanced liberal societies and developing countries. In many countries new forms of governance have emerged out of a growing realisation that representative democracy by itself is no longer sufficient. One of the most significant public policy trends in the UK has been the involvement of community organisations and their members in the delivery of national policy, mediated through local systems of governance and management. One such policy area is urban regeneration. Central government now requires local authorities in England to set up Local Strategic Partnerships (LSPs) to bring together stakeholders who can prepare Community Strategies and deliver social and economic programmes which target areas of deprivation. This paper reviews the key institutional processes which must be addressed, such as representation, accountability and transformation.