Four councils are to share £250,000 in grants from the O2 Future Fund after a competition across the local authority sector.

The Future Fund is designed to help "forward thinking" local authority ICT teams use digital innovation to drive improvements and change in engaging their staff, citizens and communities.

The four winning local authorities were selected from 40 local councils that submitted applications after the launch of the fund in April this year. Six finalists were invited to pitch to a panel of experts from O2, the Local Government Association, the Local Government Chronicle and the New Local Government Network at O2's Slough head office earlier this month.

Each of the winning teams will benefit from a package which combines O2 consultancy with access to bespoke O2 services and technology designed to help them turn their projects into reality.

Reading Borough Council was awarded the top prize of £125,000 for its "from handset to mindset" project, which demonstrated a clear way to help address the Not in Education, Employment or Training (NEET) issue among young people across West Berkshire.

The joint bid of Merthyr Tydfil and Vale of Glamorgan County Borough Councils took the second prize of £75,000, with their bid to develop an "e-community" project designed to enhance their local authorities' understanding of SMEs in a bid to encourage local economic growth.

Luton Borough Council picked up the £50,000 award for its Access Luton project, designed to redefine the council's services and its relationships with customers.

Neil Prior, head of the local government futures forum at O2, said: "We've been delighted by the response and sheer breadth of innovation, from projects which focus on fostering economic growth by creating new ways to connect with local businesses, to bids which explore ways of leveraging digital technology to engage with young people on their terms."

O2 launched a free Wi-Fi service in central London areas in time for the Olympics earlier this week