John Gummer, Secretary of State for the Environment, will not appeal against a High Court ruling that he was wrong to steer the Local Government Commission towards recommending unitary authorities.
But, in one concession, MPs expect the ridings of Yorkshire to be enlarged by David Curry, the local government minister, following consultations with Tory MPs, who warned that the proposed boundaries would be rejected.
Senior backbench Tory MPs have urged Mr Curry to include metropolitan boroughs in the new ridings, as single-tier authorities. The review, initiated by John Major to answer grass-roots demands for old shire names to be revived and simplified, will go ahead.
Mr Gummer has firmly rejected some calls for the project to be abandoned. His decision not to appeal against the High Court ruling is a boost for those county councils which want to keep a two-tier structure.
It will make it easier for the Local Government Commission for England, chaired by Sir John Banham, to make recommendations insisting on the status quo - county councils and district councils - and will undermine the Government's intention of creating single councils.
Mr Gummer will tell the House of Commons this week that he accepts the court judgment. In the ruling, following a case brought by Derbyshire and Lancashire county councils, Mr Justice Jowitt struck out a sentence in new government policy guidance which said that two-tier authorities should only be 'the exception'.
Although Mr Gummer will say that unitary authorities provide the best form of local government, he will stress that the commission is independent.
The minister will say that it has never been disputed that the commission must exercise its own judgement, after due public consultation, as to the best structure to serve local needs.
Mr Gummer will issue new guidance to the commission, with the offending sentence removed. The High Court judgment will lead to further delays in the review.
Avon and Cleveland county councils have been given permission to seek judicial reviews of decisions made by the commission.Reuse content