A significant change of policy on shadow authorities was revealed in a letter from Local Government Minister David Curry to the chairs of the local government associations last month.
The letter says where unitary authorities are based largely on the boundaries of an existing council they will not count as new, and separate shadow authorities cannot be elected.
The Isle of Wight will be caught by this new policy as the unitary authority will have the same boundaries as the old county. In other areas such as Bristol, Hull and Derby the existing district councils could benefit.
The same pattern would be followed in other areas where there is no significant boundary change.
The policy appears to have been forced on the DoE because of drafting errors in the reorganisation legislation.
The local government associations fear the change of approach could lead to reorganisation being viewed as a battle of winners and losers and predatory take overs.
'In some areas it may allow a take over mentality to develop which we have all been working very hard to avoid. I have no doubt we will be saying it is unsatisfactory and the DoE must think again', said Association of County Councils Secretary Robin Wendt.
Unison is angry with the Curry letter. It says staff in councils being taken over might be disadvantaged by an authority taking over favouring its own staff.
On the Isle of Wight, South Wight and Medina BCs say the new arrangements would represent a county takeover. The county is joining them in opposition to the proposals.
Medina said the DoE was ignoring the wishes of the islanders and the recommendations of the Local Government Commission that there should be a new authority.
'If the Local Government Act 1992 is flawed they must legislate to put it right. We will oppose this tooth and nail and by all possible means so the people of this island get the local government they want and deserve', said Medina Leader Mike Fletcher.
Mr Curry attempts to play down the significance of the change, saying the policy of members receiving a fresh mandate from the local electorate to plan for change is retained.
'Holding elections prior to structural change would be simple to present to the electorate and would give councillors a clear mandate to plan for taking on the new functions as well as carrying on with the normal business of the authority', he says in his letter.
'In other words our policy is staying the same but we will in some cases be getting there by a slightly different route. I hope you will have no difficulty with this.'.
But the Association of District Councils also views it as a significant and unwelcome change in policy.
'The DoE view has always been expressed to the ACC and the ADC that there would be new authorities and reorganisation would proceed with elections for shadow authorities so there would clearly not be a take over by a county council or a district council', said ADC Secretary Geoffrey Filkin.
Mr Wendt said if there was no way around it, the law must be changed.
It was too early to say which of the unitary authority proposals would involve no significant boundary changes and therefore no shadow authorities, he said.
Unison Deputy Head of the Local Government Service Group Dennis Reed has written back to Mr Curry warning that the proposals could 'derail the delicate and difficult process of co-operation and consultation'.