The council will replace traditional council departments with a series of delivery units and support units from 1 October. It is hoped this will strip out waste and duplication, saving the taxpayer £30 million over the next three years.
As part of the restructure 185 staff will leave the organisation by the end of this year, with a further 35 leaving by September 2010. Approximately 100 of these posts will be shed through voluntary and compulsory redundancies.
Westminster has traditionally been a ‘commissioning council' and has made notable savings over recent years - a customer services contract made savings of £4.6 million in three years against a base budget of £31 million.
But strategic commissioning differs because it takes a more holistic approach by assessing what residents need from services, addressing gaps in provision and looking at new ways of purchasing services from external providers.
Colin Barrow, leader of Westminster City Council, said: "Like many councils across the UK, we are facing difficult choices on how to maintain public confidence in local services while adjusting to today's tough new economic realities.
"The council does not operate in isolation from the outside world and has reduced income from falling interest rates and government grants that are insufficient to support the services that need to be delivered.
"What is clear is that our old ways of working were simply not sustainable or affordable and it is only through fundamental change that we can keep ahead of the game.
"Over the past year, we've had to take some tough and at times unpopular decisions in deleting posts and carrying out a number of redundancies, but we firmly believe this new structure with its emphasis on commissioning services forms the blueprint that other local authorities should now follow if they wish to meet the challenges of the new financial world we operate in and the public's rising expectations of local government."
