Istanbul is renowned as the place where east meets west, the only city in the world, in straddling the Bosphorus, situated in two continents, Europe and Asia. But it may soon lose this unique status if the Turkish government goes ahead with a plan to divide it in two.

The prime minister, Recep Tayyip Erdogan, a former Istanbul mayor, has announced what he described as a "wild project" to split the city into European and Asian sides to make it easier to govern.

"We will build two new cities in Istanbul due to high population," Erdogan said, announcing his party's manifesto for June elections.. "One on the European side and one on the Anatolian side."

Istanbul's official population is soon expected to reach 17 million, with thousands more unregistered people living in the city.

Tahire Erman, an urban planning expert at Ankara's Bilkent University, said this caused significant problems for authorities: "[Istanbul] is already overgrown, and there are already many problems in the provision of infrastructure and municipal services to the city."

Should the plan go ahead, the two cities would be well connected by transport links promised by the ruling party, including a third bridge over the Bosphorus, the strait that divides the European and Anatolian sides of the city, and two tube tunnels for cars and rail transport under the water. Two bridges and frequent ferries already connect the two sides of the city.

Resident Emre Borat, a 25-year-old computer engineer, welcomed the proposal. "Actually their project is not like dividing up into two, but more like creating [new cities] from Istanbul," he said. "Since our economy is getting better, it seems like a good idea to have a separate city for the finance world, or for foreign investment in general."

Plans have been announced to build a new financial district in Atasehir, a booming district on the Anatolian side of Istanbul, as part of a government pledge to increase Turkey's global stature by 2023, the centennial anniversary of the Turkish republic.

No information has been released on what the proposed new cities would be called. Mustafa Demir, 51, a salesman, said that while the city was currently "ungovernable" any possible division might go badly "if they do it with the wrong intentions".

But the opposition People's Republican Party vice-president, Gürsel Tekin, said the proposal was not practical. "The prime minister has these sorts of ideas. It does not matter if these projects come alive. They are soundbites."

Ayse Onol, a former journalist from Istanbul who knew Erdogan when he was mayor, said the announcement was not a serious proposal. "People in Turkey just care about headlines, Erdogan knows this. 2023 is far in the distance. People think we will be grander than America; this is a populist policy. It doesn't matter if Istanbul is divided into two or 12. What matters is how the city is used, not how it is divided."

• This article was amended on 19 April 2011. The original said that Istanbul is the only city in the world to straddle Europe and Asia. This has been corrected.