Since the election of the New Labor government in the UK in 1997, the voluntary sector has been drawn from the margins to the maistream of public policy making. Ar a political level the government has sought to change the nature of relationships between itself and the voluntary sector. In order to accomplish this, new institutional relationships need to be cultivated between public bureaucracies and voluntary sector institutions. This article evaluates the current attempt in the UK to develop institutional mechanisms for relationship building through the development of "compacts' between government and the voluntary and communitu sector. Such as compact offer a relational contracting approach to structuring evolving relationships between these sectors. Since their inception in the UK, international interest in compacts has grown steadily. It is therefore important to begin to evaluate the key lessons from the UK experience to underpin discussions of policy transfer. This article is structured in four parts. The first part charts briefly government-voluntary sector (G-VS) relatinships in England over the period 1979-2000. Ir draws examples in particular from experience in the field of area regeneration. The second part introduces the concept of the Voluntary Sector Compact (VSC), and argues that it is central to the approach of the current labour government to these relationships. It differentiates this approach from that of the previous government, denoted here as the service agency model, and situates it within the meta-paradigm of community governance. The third part explores the implementation of the compact in England at both the national and local level. The final part draws out key lesson from this for the future of Local Government-Volulntary Sector (LG-VS) relationships in England, situating these within an emerging model of LG-VS relationships.