Cumbria Constabulary Chief Constable Michael Baxter said the Government would be unable to continue with its plan to slash the number of police forces from 43 to 24 by 2008.
The force yesterday pulled out of its voluntary scheme to amalgamate with Lancashire Constabulary after the Government failed to resolve a crucial funding issue.
The Times today reported Mr Reid would announce tomorrow that the mergers plan, which was initially proposed by his predecessor Charles Clarke, would be abolished.
The Home Office insisted discussions were ongoing and Mr Reid was not "immediately" planning to make an announcement.
Mr Baxter said he was unable to see how the forces' restructuring plan would be able to work if a deal could not be brokered between Lancashire and Cumbria.
He said: "If it can't work between Cumbria and Lancashire, it can't work anywhere."
Mr Baxter said it was not his place to confirm the deal had been scrapped but said he expected a minister to make an announcement tomorrow.
He added: "The issue of mergers has not completely gone away. They could come back in two or three years time."
Last month, Mr Reid announced he was delaying plans for the mergers until the autumn.
The proposed merger of the two forces was the only one to receive the full backing of the police authorities involved.
Both forces issued a joint statement yesterday expressing their "intense disappointment" at the Government for failing to resolve the "deal-breaker" issue of council tax harmonisation.
The statement said following a meeting with policing minister Tony McNulty yesterday morning, the Government had not offered any solutions to the funding problem.
The statement read: ""Both authorities had previously insisted that the merger would only proceed if the Government was able to provide a solution to the 'deal-breaker' issue of council tax harmonisation.
"Cumbria and Lancashire representatives expressed their intense disappointment that Government had failed to find a solution to a problem identified many months previously.
"At the meeting, the minister admitted that he had been unable to provide any solutions.
"He also conceded that the Government had no other proposals to make and accepted that under these conditions, it would be most unlikely that the amalgamation would now go ahead."
The Government refused proposals by the two forces to standardise increases in council tax police precepts.
The restructuring plan was the brainchild of former home secretary Charles Clarke and has been dogged by problems with several forces unwilling to merge.
Cleveland police authority rejected Mr Clarke's suggestion that its force should combine with Durham and Northumbria, both of which were in favour of the move.
Cheshire voted against merging with Merseyside and West Mercia opposed a suggested joining with Staffordshire, Warwickshire and the West Midlands.
Only Lancashire and Cumbria agreed to cooperate with Mr Clarke's blueprint.
The mergers plan followed a HMIC report published in September 2005 which highlighted "significant weaknesses" in the police provision of protective services.
The report said larger amalgamated police forces would be better suited to tackling the modern threats of organised crime and terrorism.
Mr Baxter said local forces would now have to collaborate and form stronger alliances with their regional counterparts and national security bodies.
Brian Aldred, chief executive of Lancashire Police Authority, said the force had withdrawn from the scheme due to the Government's unwillingness to bend on their policy of increases in council tax.
When the two forces put forward their voluntary merger proposal they attached a number of conditions - one of which was a common council tax for both counties.
He said: "In Lancashire the council tax is particularly low, at £113, and in Cumbria it is particularly high at £163.
"Out of that we would have to have a common figure of £126 a year.
"The authority took the view that increase was worth paying because it would improve police services in Lancashire.
"But the Government was not prepared to see that increase happen."
He added: "The Treasury have a rigid policy on council tax increases. This is a common policy and they were not prepared to break that."
Steve Finnigan, acting chief constable of Lancashire Police, said the two authorities "could not have been any clearer" in their proposals when outlining this as an important condition.
But he said the Home Office seemed more interested in seeing how fast the merger could happen than working out whether it was actually possible.
He said: "If the Government had told us that from the outset we would not have gone as far as this."
He continued: "There is no doubt that in the Government there is a real sensitivity about council tax and the whole capping issue.
"What really riles me is that this has failed for £12."
Mr Aldred added: "One thing they (the Home Office) can learn from this is to deal with the big issues at the outset. With hindsight that should have been dealt with sooner."
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