Cornwall's six district councils and the county council are to be scrapped with powers going to one new council.
Councils say unitary status would allow more funding for local services
The new council will be responsible for roads and education, as well as leisure, environmental health and housing.
The county council welcomed the government's go-ahead for its bid to have unitary status which it said would save £17m a year.
The union Unison said it was concerned about the affect on jobs.
David Whalley, leader of Cornwall County Council, said the change would deliver improved, more efficient services.
It will mean the number of councillors being reduced from 341 to 82 at the least and 164 at the most, depending on talks between the government and the local authorities.
Mr Whalley said: "Cornwall has been given a once in a lifetime opportunity to shape its own future."
He said that the change was "only the beginning" and more government powers should be devolved to the new council.
Subject to legislation the new authority could be up and running in 2009.
Stuart Roden regional officer for the union Unison, said: "We will be seeking urgent talks with the councils so that we can get clear messages out to all the staff impacted by the changes.
"Unison is totally opposed to any compulsory redundancies and we will be campaigning to protect jobs and services during the transition and beyond."
Roger Harding, a councillor at Penwith District Council which opposed the county council's unitary bid, said: "It's a sad day for democracy.
"Eighty nine per cent of people in our district poll were against it.
"Important decisions about Penwith are going to be made in Truro in future."
Graham Facks-Martin, chairman of North Cornwall District Council, which also opposed a unitary council, said its "overriding aim" now was to ensure residents did not suffer any reduction in service standards.
He said: "North Cornwall District Council prides itself on being a 'can-do council' with a positive culture.
"We would like to see that culture transferred to the new organisation so that it can better help Cornwall face the challenges ahead."