The first stage of the review will examine the role of the agency and is expected to be complete by December. The second stage will deal with structural implications if its remit is changed. This is expected to be complete by Easter.
It is likely to recommend that some of EP's powers be delegated to regional development agencies.
EP said it welcomed the review, adding that it was a natural development in light of the reorganisation of departmental responsibilities after the general election.
The review will be headed by Lord Falconer and a team from the DTLR.