Housing and communities secretary Sajid Javid has approved the merger of West Somerset DC and Taunton Deane BC.
Mr Javid had said he was “minded to” approve the merger in November last year.
In a written statement today, Mr Javid said he had considered representations submitted since then and he is “satisfied” the proposal meets his criteria for district mergers.
He said the new council, which will be called Somerset West & Taunton DC, “is likely to improve local government and service delivery in the area, commands a good deal of local support, and that the new council area is a credible geography”.
Mr Javid said the new council will be established on 1 April next year, pending parliamentary approval.
West Somerset, which is England’s smallest district, and Taunton Deane have shared management and services since the former was engulfed by a financial crisis in 2013. The councils have previously said merging would save them £3.1m a year overall.
Last month Mr Javid approved the merger of Suffolk Coastal and Waveney DCs to form a single East Suffolk DC, and the separate merger of Forest Heath DC and St Edmundsbury BC to create West Suffolk DC.