North Yorkshire's county and district councils are to be scrapped and replaced with a single authority covering the whole county.
City of York Council will remain separate but all others will be fused together under a new, unitary authority covering a population of 618,000.
The government decision comes after a consultation earlier this year.
It has been met with dismay by district and borough leaders who wanted to retain key services.
Under the reorganisation plans, the current two-tier system, which has been in place since 1974, will be replaced with a unitary authority.
Currently, services including social care and education are run by North Yorkshire County Council, while the districts look after areas including planning and bin collections.
It is expected that the new council will deliver all public services in the county from April 2023.
The aim of reorganisation is to unlock the door to devolution and also save money by bringing all services under the control of a streamlined structure.
North Yorkshire County Council had backed the single authority plans, while the district councils except Hambleton, which rejected all options on the table, submitted a bid for two authorities split on a east/west basis.
The split would have seen Harrogate join with Craven, Hambleton and Richmondshire, while Scarborough would have merged with Selby, York and Ryedale.
What do different councils do?
In most of England, local government operates under a two-tier system, with both a county council and a district council providing services.
County councils' responsibilities include education, social services and waste disposal.
Each county is subdivided into areas represented by district councils. These councils are responsible for rubbish collection, housing and planning.
Some parts of the country - usually cities or larger towns - are governed by unitary authorities which provide all local government services.
Councillor Richard Cooper, leader of Harrogate Borough Council, said he was "disappointed" by the decision.
"My argument has always been that any unitary for our area needs to be of the right size and structure to deliver efficient and responsive services to residents."
He added: "The county council deliver some services exceptionally - children's services and adult social care to name two. In other areas they let our borough down."
Councillor Angie Dale, leader of Richmondshire District Council, said she was "extremely disappointed" that the government "had chosen to create one huge council" .
But she said they would "work together" to make sure the new system worked for residents.
Keith Aspden, the leader of York City Council welcomed news the authority would not be affected by the shake-up.
He said: "The government's decision is a huge vote of confidence for York, its council and recognition of the progress we have achieved with our local partners, businesses and communities.
"From the very beginning of this process, residents and organisations from across the city strongly made the case for York, stressing the need for continuity to support our recovery.
"We are delighted that so many residents, businesses and partners had their say, and that our city's voice has been heard."