A new independent football regulator will test the fitness of new owners, ensure clubs are run sustainably, resolve any issues around how money flows from the Premier League down the pyramid and blocking clubs from joining breakaway leagues.

The government published its White Paper on football governance on Thursday, and has now confirmed it will act on a recommendation from the 2021 fan-led review of football to create a regulator.

The key recommendations from the football governance white paper are:

Following the formation of the European Super League in April 2021, which prompted the government to bring forward its plan to commission a fan-led review, the regulator will also have the power to prevent English clubs from joining new competitions that do not meet a predetermined criteria, in consultation with the FA and fans.

That criteria could include measures to stop clubs participating in closed-shop breakaway competitions which harm the domestic game, such as the European Super League.

Another of the body's main purposes would be to oversee a licensing system to ensure clubs are run sustainably, following the collapse of Bury and Macclesfield in recent years. The regulator will also run an owners' and directors' test, with a focus on the fitness and propriety of new owners and enhanced due diligence.

The regulator will also make sure fans have a greater say in the running of their clubs, giving them a say if owners try to to change aspects of a club's heritage, such as a team name, badge or home shirt colours. Clubs will also have to seek regulator approval for any sale or relocation of a stadium.

The regulator will also be able to step in and force arbitration if the Premier League, the EFL and the Football Association are unable to reach a new settlement on how top-flight finances support the game at lower levels.

Discussions between the bodies are ongoing. The EFL's chairman, Rick Parry, is looking to secure 25 per cent of all pooled broadcast revenues in a new settlement, alongside the introduction of two to one merit-based payments in the Premier League and Championship and the abolition of parachute payments in a bid to reduce what he sees as the "cliff edge" between the first and second tiers.

Parry had called for the regulator to be given backstop powers and said earlier this week he would be "very negative" if the government did not address it in the White Paper.

The government is confident the regulator's powers will be balanced in such a way that it will not diminish the competitiveness and strength of the Premier League, which in financial terms is streets ahead of even the other 'Big Four' leagues in Europe.

At this stage it is not clear whether there will be any human rights element to the owners' and directors' test, which Amnesty International has called on the Premier League to introduce in the wake of the Saudi-led takeover of Newcastle and has echoed again amid a Qatari bid for Manchester United.

The Premier League statement: "The publication of this White Paper is a significant moment for English football. The Premier League and its clubs will now carefully consider the government's plan for England to become the first major nation to make football a government-regulated industry. 

"The Premier League, alongside the rest of English football, is a global success. We fully recognise that the passionate support of millions of football supporters is fundamental to our competition. We are proud that our success has been consistently shared for the benefit of the wider game, and of our clubs, who have a positive impact every day in their local communities.

"The Premier League recognises the case for change in football governance and continues to implement stronger and more independent regulation. We are strengthening our ownership rules and are already providing £1.6bn in financial support to the wider game in this current three-year cycle.

"We appreciate the government's commitment to protect the Premier League's continued success. It is vital that regulation does not damage the game fans love to watch in the deepest professional pyramid in the world, or its ability to attract investment and grow interest in our game.

"We will now work constructively with stakeholders to ensure that the proposed government regulator does not lead to any unintended consequences that could affect the Premier League's position as the most-watched football league in the world, reduce its competitiveness or put the unrivalled levels of funding we provide at risk.

"The Premier League has already taken action to address many issues raised in the Fan-Led Review, and will work with government and parliamentarians on the next phase of the White Paper. We are committed to delivering a football-led solution to address key issues in the game - including financial distributions, financial controls and the football calendar - together with The FA and the EFL."

FA CEO Mark Bullingham commented: "We welcome the publication of the White Paper and its commitment to improving the financial sustainability and governance of professional clubs.

"We will submit a full response to the proposals in the White Paper in the coming weeks. Our response will highlight a critical point made repeatedly by the Fan Led Review, which recommended that the professional game increases funding of the grassroots game.

"The players, referees, coaches and volunteers in grassroots football are the foundations of the English game, and it is important that an independent regulator recognises this and supports the long term health of the whole game."

The EFL statement: "The EFL has been clear that the English game needs a fundamental financial reset in order make the game sustainable so that all clubs can continue to serve their supporters and communities long into the future.

"After an extensive period of consultation, the EFL is therefore pleased to note that the government's announcement regarding an independent regulator proposes to "oversee the financial sustainability of the game" and we welcome that a regulator will have "targeted powers of last resort to intervene and facilitate an agreement as and when necessary", should football be unable to find a funding agreement that safeguards the future of our pyramid for the long term.

"Going hand-in-hand with financial reform, the League is supportive of proposals relating to enhanced regulation and looks forward to consulting with government on matters including club licensing, the owners' and directors' test and heritage protection in the period ahead.

"A landmark moment for the future of our game, we now await to review the White Paper in its entirety and will consider our position in full. The Fan Led Review White Paper represents a once in a generation opportunity that must be seized to address the systemic issues that football has been unable to sort itself over the last 30 years."

The review also recommended the introduction of a levy of up to 10 per cent on Premier League transfer deals to support the pyramid and grassroots football. This was heavily criticised at the time by top-flight bosses, with Leeds chief executive Angus Kinnear likening it to Maoism.

His Aston Villa counterpart Christian Purslow also warned over-regulation ran the risk of "killing the golden goose" of the Premier League.

The government is understood to have had concerns that a levy could have had unintended consequences, and believes giving the regulator backstop powers is a better solution.

The review also recommended consultation on a pilot at selected fourth and fifth-tier clubs allowing the sale of alcohol in sight of the pitch, something the UK's football policing lead, chief constable Mark Roberts, was vehemently opposed to. The government sees this as a complex issue requiring further work to be done.

The government says it will now embark on further consultation with the key stakeholders, with plans to bring forward legislation to be announced as soon as parliamentary time allows.

Prime Minister Rishi Sunak said: "Since its inception over 165 years ago, English football has been bringing people together, providing a source of pride for communities and inspiration to millions of fans across the country.

"Yet despite the success of the sport both at home and abroad, we know that there are real challenges which threaten the stability of clubs both big and small.

"These bold new plans will put fans back at the heart of football, protect the rich heritage and traditions of our much-loved clubs and safeguard the beautiful game for future generations."

The government also plans to look at the existing visa system for elite footballers in England to examine how the game can continue to attract the best global talent while maintaining strong support for young domestic players to develop from the grassroots level.