Exeter City Council faces calls for an inquiry after it won its bid to take on new powers from Devon County Council.
Councils say unitary status would allow more funding for local services
The city council has got a go-ahead by the government to become independent of the county council in 2009.
But a Devon MP and the county council called for a legal challenge into the city council's estimate of cost savings from unitary status.
Exeter would take on education, libraries and social care in the move it says will save millions of pounds.
The council says it will cost £6m to become a unitary authority, but that it could then save £12m a year on administration costs.
But Local Government Minister John Healey said when he announced unitary status for local authorities there were affordability "risks" in Exeter's proposal.
He said Exeter was one of four councils which would have to submit further information on the "financial viability" of their proposals before being totally signed off in September.
Devon County Council leader Brian Greenslade said he would be pressing for a judicial inquiry.
He said: "The city council proposal carries a high financial risk and we have given that warning repeatedly.
"No minister could safely put through such a risky proposal."
East Devon MP Hugo Swire backed the call for an inquiry.
He said: "We need further scrutiny of all the calculations Exeter City Council have made and we need to look again at the potentially negative effect this could have on Devon's delivery of services in the county."
Exeter City Council leader Pete Edwards said: "I'm calling on Devon County Council to accept the decision with good grace and work with us now to deliver the best possible services to Exeter people."
Exeter MP and Minister for the South West, Ben Bradshaw, said he thought the city's unitary application would succeed.
He said: "We know from experience in other parts of the country that single-tier councils are better value for money because you don't have the duplication in two-tier areas.
"The government quite rightly wants to make sure the savings that Exeter thinks can be made are real.
"But it has all-party support on the council and I don't think there should be too many hurdles in the way."