Durham County Council and Blaenau Gwent Borough Council are calling on technology businesses to develop solutions that capture and analyse data to improve public services.
The councils have secured £1.25m funding from the GovTech Catalyst Fund scheme to help applicants develop their innovative solutions.
They will award five companies with up to £50,000 to develop their ideas focusing on how real-time data can improve service delivery and reduce costs.
Cllr Brian Stephens, portfolio holder for neighbourhoods and local partnerships at Durham County Council, said: 'The GovTech Catalyst Fund competition is a fantastic way to drive innovation in our economy and provide more opportunities for businesses to access public procurement and funding. We have a wealth of technology expertise in the region that we look forward to showcasing through this competition.
'We are excited to see the applications and the development of an innovative, bespoke solution that will enable us to deliver even better public services based on the use of real-time data.'
The competition will open on 24 September.