The decision ends months of uncertainty, after a compromise was agreed between the two main parties, the Democratic Unionists and Sinn Fein. Only the Ulster Unionists opposed the solution.
Belfast City Council is likely to retain its existing boundaries, while the new councils are mergers of two, three or, in one case, four authorities.
Functions transferred to the new councils from the Northern Ireland government will include some planning, rural development, aspects of roads, urban regeneration, community development, some housing-related functions, local economic development and tourism.
Previous proposals to transfer most planning responsibilities, youth services, fire and rescue, local road maintenance and supporting people have been dropped.
Ms Foster said: “Our vision for local government is of a strong, dynamic local government creating communities that are vibrant, healthy, prosperous, safe and sustainable and have the needs of all citizens at their core.
“Critical to the delivery of services that are linked with local peoples’ needs and ambitions will be the introduction of a statute-based, council-led community planning process.”
The Northern Ireland Local Government Association (NILGA) said it would have preferred a 15-council solution, which it considered more likely to retain local identities. It is unhappy councils will not gain substantial new responsibilities.
NILGA’s chief executive, Heather Moorhead, told LGC: “We are delighted that there is a decision. We are a bit disappointed that there is not more in the package. We don’t think it’s anywhere near the right package for a step change in delivery the vision is right, but the practicalities don’t deliver.”
It hopes local government will gradually be given additional powers.
A spokeswoman for the Department of the Environment said it will clarify the responsibilities to be transferred when the minister makes a statement to the Assembly after Easter.
Next year’s scheduled local elections are now likely to be abandoned, with elections for the new councils taking place in 2011.